Exhibit 10.1
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AGREEMENT AND PLAN OF MERGER
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Among
GEORGIA-PACIFIC CORPORATION,
FENRES ACQUISITION CORP.
and
FORT XXXXX CORPORATION
Dated as of July 16, 2000
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PAGE
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions....................................................1
SECTION 1.02. Other Defined Terms............................................4
ARTICLE II
THE OFFER
SECTION 2.01. The Offer......................................................6
SECTION 2.02. Company Action.................................................7
SECTION 2.03. Directors......................................................8
ARTICLE III
THE MERGER
SECTION 3.01. The Merger....................................................10
SECTION 3.02. Articles of Incorporation of the Surviving
Corporation..................................................10
SECTION 3.03. By-Laws of the Surviving Corporation..........................10
SECTION 3.04. Directors and Officers of the Surviving Corporation...........10
SECTION 3.05. Closing.......................................................10
ARTICLE IV
CONVERSION OF SHARES AND RELATED MATTERS
SECTION 4.01. Conversion of Capital Stock...................................11
SECTION 4.02. Exchange of Shares............................................12
SECTION 4.03. Exchange of Certificates......................................12
SECTION 4.04. Stock Options and Other Stock Plans...........................15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 5.01. Due Organization, Good Standing and Corporate Power...........17
SECTION 5.02. Authorization and Validity of Agreement.......................17
SECTION 5.03. Capitalization................................................18
SECTION 5.04. Consents and Approvals; No Violations.........................19
SECTION 5.05. Company Reports and Financial Statements......................20
SECTION 5.06. Information to Be Supplied....................................21
SECTION 5.07. Absence of Certain Events.....................................21
SECTION 5.08. Litigation....................................................21
SECTION 5.09. Title to Properties; Encumbrances.............................22
SECTION 5.10. Compliance with Laws..........................................22
SECTION 5.11. Company Employee Benefit Plans................................23
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TABLE OF CONTENTS (cont'd)
SECTION 5.12. Labor/Employment..............................................23
SECTION 5.13. Taxes.........................................................24
SECTION 5.14. Intellectual Property.........................................25
SECTION 5.15. Broker's or Finder's Fee......................................26
SECTION 5.16. Environmental Laws and Regulations............................26
SECTION 5.17. State Takeover Statutes.......................................27
SECTION 5.18. Voting Requirements; Board Approval; Appraisal
Rights.......................................................27
SECTION 5.19. Opinion of Financial Advisor..................................28
SECTION 5.20. Rights Agreement..............................................28
SECTION 5.21. Non-competition Agreements....................................28
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 6.01. Due Organization, Good Standing and Corporate Power...........28
SECTION 6.02. Authorization and Validity of Agreement.......................29
SECTION 6.03. Capitalization................................................29
SECTION 6.04. Consents and Approvals; No Violations.........................30
SECTION 6.05. Parent Reports and Financial Statements.......................31
SECTION 6.06. Information to Be Supplied....................................32
SECTION 6.07. Absence of Certain Events.....................................33
SECTION 6.08. Litigation....................................................33
SECTION 6.09. Compliance with Laws..........................................33
SECTION 6.10. Parent Employee Benefit Plans.................................34
SECTION 6.11. Broker's or Finder's Fee......................................34
SECTION 6.12. Ownership of Capital Stock....................................35
SECTION 6.13. Vote Required.................................................35
SECTION 6.14. Financing.....................................................35
ARTICLE VII
TRANSACTIONS PRIOR TO CLOSING DATE
SECTION 7.01. Access to Information Concerning Properties and
Records......................................................35
SECTION 7.02. Confidentiality...............................................36
SECTION 7.03. Conduct of the Business of the Company Pending the
Closing Date.................................................36
SECTION 7.04. Conduct of the Business of Parent Pending the
Closing Date.................................................39
SECTION 7.05. Company Shareholder Meeting; Preparation of Proxy
Statement/Prospectus.........................................40
SECTION 7.06. Reasonable Best Efforts.......................................42
SECTION 7.07. No Solicitation...............................................42
SECTION 7.08. Notification of Certain Matters...............................44
SECTION 7.09. Antitrust Laws................................................44
SECTION 7.10. Directors' and Officers' Insurance............................46
SECTION 7.11. Public Announcements..........................................47
SECTION 7.12. Transfer Tax..................................................47
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SECTION 7.13. NYSE Listing..................................................48
SECTION 7.14. Affiliates of the Company.....................................48
SECTION 7.15. Section 16 Matters............................................48
SECTION 7.16. Employee Benefits.............................................48
SECTION 7.17. Voting of Shares..............................................50
SECTION 7.18. The Company Rights Plan.......................................50
SECTION 7.19. Fees and Expenses.............................................50
SECTION 7.20. Merger Sub....................................................50
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to Obligations of Each Party.......................50
ARTICLE IX
TERMINATION
SECTION 9.01. Termination...................................................51
SECTION 9.02. Effect of Termination.........................................53
SECTION 9.03. Payment of Certain Fees.......................................53
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Representations and Warranties...............................54
SECTION 10.02. Extension; Waiver............................................54
SECTION 10.03. Notices......................................................54
SECTION 10.04. Entire Agreement.............................................55
SECTION 10.05. Binding Effect; Benefit; Assignment..........................56
SECTION 10.06. Amendment and Modification...................................56
SECTION 10.07. Further Actions..............................................56
SECTION 10.08. Headings.....................................................56
SECTION 10.09. Enforcement..................................................56
SECTION 10.10. Counterparts.................................................56
SECTION 10.11. Applicable Law...............................................57
SECTION 10.12. Severability.................................................57
SECTION 10.13. WAIVER OF JURY TRIAL.........................................57
ANNEX I ....- Conditions of the Offer
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 16, 2000 (this
"Agreement"), by and among GEORGIA-PACIFIC CORPORATION, a Georgia corporation
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("Parent"), FENRES ACQUISITION CORP., a Virginia corporation and a direct wholly
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owned subsidiary of Parent ("Merger Sub"), and FORT XXXXX CORPORATION, a
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Virginia corporation (the "Company").
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WHEREAS, the Boards of Directors of Parent and the Company each have
determined that it is in the best interests of each corporation and their
respective shareholders to effect a business combination between Parent and the
Company and, accordingly, have agreed to effect the merger of Merger Sub with
and into the Company, with the Company as the surviving corporation, upon the
terms and subject to the conditions set forth herein (the "Merger"); and
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WHEREAS, by resolutions duly adopted, the respective Boards of
Directors of the Company, Parent and Merger Sub have approved and adopted this
Agreement and the transactions contemplated hereby.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. When used in this Agreement, the following terms
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shall have the respective meanings specified therefore below (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
"Acceptance Date" shall mean the date on which Merger Sub accepts
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for payment all shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer.
"Affiliate" shall mean, with respect to any specified Person, any
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Person who directly or indirectly controls, is controlled by, or is under common
control with, such specified Person; provided that, for the purposes of this
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definition, "control" (including with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or partnership interests, by
contract or otherwise.
"Average Price" shall mean the average (rounded to the nearest
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1/10,000) of the volume weighted averages (rounded to the nearest 1/10,000) of
the trading prices of Parent Common Stock on the NYSE, as reported by Bloomberg
Financial Markets (or such other source as the parties shall agree in writing),
for the 10 consecutive Trading Days ending on the third Trading Day immediately
preceding the Acceptance Date.
"Business Day" shall mean a day other than a Saturday, a Sunday or a
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day on which banks in New York, New York are permitted or required to close.
"Company Common Stock" shall mean the Company's common stock, par
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value $.10 per share, including the Company Rights associated therewith.
"Company Material Adverse Effect" shall mean any event, change,
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occurrence, effect, fact or circumstance that is materially adverse to (i) the
ability of the Company to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby or (ii) the business, assets,
liabilities, results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole, but shall exclude any effects, consequences or
conditions arising out of (A) any change in (x) U.S. or global economic or
industry conditions, (y) U.S. or global financial markets or conditions or (z)
any generally applicable law, rule or regulation or GAAP or interpretation of
any of the foregoing or (B) the announcement of this Agreement or the
transactions contemplated or required hereby, including any actions required
under this Agreement pursuant to Section 7.09.
"Company Options" shall mean options to purchase shares of the
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Company Common Stock, whether issued pursuant to a Company Employee Benefit Plan
or otherwise.
"Company Rights" shall mean the right associated with each share of
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Company Common Stock to purchase one-one-thousandth of a share of the Company's
Series M Cumulative Participating Preferred Stock, par value $10.00 per share.
"Company Shareholder Approval" shall mean the approval of this
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Agreement at the Company Shareholder Meeting by more than two-thirds of all
votes entitled to be cast at the Company Shareholder Meeting.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended.
"Exchange Ratio" (as the same may be adjusted pursuant to Section
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4.01(d)) shall be equal to (i) .2644, if the Average Price is less than or equal
to $39.33 or (ii) if the Average Price is greater than $39.33, the number of
shares of Parent Common Stock equal to $10.40 divided by the Average Price.
"GAAP" shall mean generally accepted accounting principles of the
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United States of America, as in effect from time to time.
"know" or "knowledge" shall mean, with respect to any party, the
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knowledge of such party's executive officers.
"Merger Sub Common Stock" shall mean Merger Sub's common stock, par
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value $.01 per share.
"NYSE" shall mean the New York Stock Exchange, Inc.
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"Parent Common Stock" shall mean Georgia-Pacific
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Corporation-Georgia-Pacific Group Common Stock, par value $.80 per share,
including the Parent Rights associated therewith.
"Parent Material Adverse Effect" shall mean any event, change,
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occurrence, effect, fact or circumstance that is materially adverse to (i) the
ability of Parent to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby or (ii) the business, assets,
liabilities, results of operations or financial condition of Parent and its
Subsidiaries, taken as a whole, but shall exclude any effects, consequences or
conditions arising out of (A) any change in (x) U.S. or global economic or
industry conditions, (y) U.S. or global financial markets or conditions or (z)
any generally applicable law, rule or regulation, GAAP or interpretation of any
of the foregoing or (B) the announcement of this Agreement or the transactions
contemplated or required hereby, including any actions required under this
Agreement pursuant to Section 7.09.
"Parent Rights" shall mean the rights associated with each share of
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Parent Common Stock to purchase one-one-hundredth of a share of Parent's Series
B Junior Preferred Stock, no par value.
"Per Share Amount" shall mean the sum of (a) $29.60 and (b) the
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product of the Exchange Ratio and the Average Price.
"Person" shall mean and include an individual, a partnership, a
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joint venture, a corporation, a trust, an association, an unincorporated
organization, a limited liability company, a limited partnership, a group, a
syndicate, a person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act) and a government or other department or
subdivision or instrumentality or agency thereof.
"Proxy Statement/Prospectus" shall mean the proxy
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statement/prospectus included in the Merger Registration Statement relating to
the Company Shareholder Meeting.
"SEC" shall mean the U.S. Securities and Exchange
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Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Significant Subsidiary" shall mean (a) with respect to the
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Company, Fort Xxxxx Operating Company, Fort Xxxxx-Xxxxxxxxxx, Inc., Xxxxxx
Associates Corporation, Fort Xxxxx UK Limited, Fort Xxxxx International
Holdings, Ltd., Fort Xxxxx Xxxxxx S.A.S., Fort Xxxxx Xxxxxx s.c.a., Fort Xxxxx
Canada Inc., Fort Xxxxx S.P.R.L.S. Com. p.A. and Fort Xxxxx Italia S.r.l. and
(b) with respect to Parent, Brunswick Pulp & Paper Company, CeCorr, Inc., G-P
Gypsum Corporation, Georgia-Pacific Resins, Inc., Georgia-Pacific Tissue, LLC,
Georgia-Pacific West, Inc., Great Northern Nekoosa Corporation, North American
Timber Corp. and Unisource Worldwide, Inc.
"Subsidiary" shall mean, with respect to a Person, (x) any
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partnership of which such Person or any of its Subsidiaries is a general partner
or (y) any other entity in which such Person or any of its Subsidiaries owns or
has the power to vote more than 50% of the equity
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interests in such entity having general voting power to participate in the
election of the governing body of such entity.
"Trading Day" shall mean any day on which securities are traded on
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the NYSE.
SECTION 1.02. Other Defined Terms. The following terms used herein are defined
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in the Section of this Agreement specified below:
Terms Section
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"401(k) Plan" Section 7.16(c)
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"Acquisition Agreement" Section 7.07(b)
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"Agreement" Preamble
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"Antitrust Authorities" Section 7.09(b)
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"Antitrust Law" Section 7.09(b)
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"Articles Of Merger" Section 3.01(a)
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"Cashout Election" Section 4.04(a)
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"Certificate" Section 4.01(c)
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"Claims" Section 5.16
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"Closing" Section 3.05
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"Closing Date" Section 3.05
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"Code" Section 5.11(a)
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"Company" Preamble
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"Company Disclosure Schedule" Article V
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"Company Employee Benefit Plans" Section 5.11(a)
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"Company Employees" Section 7.16(a)
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"Company Intellectual Property" Section 5.14(a)
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"Company Preferred Stock" Section 5.03(a)
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"Company Property" Section 5.16
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"Company Recommendation" Section 7.05(a)
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"Company SEC Reports" Section 5.05(a)
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"Company Shareholder Meeting" Section 7.05(a)
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"Confidentiality Agreement" Section 7.02
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"Continuing Directors" Section 2.03(a)
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"Consent Decree" Section 7.09(b)
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"Contacts" Section 7.09(a)
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"Contracts" Section 5.04
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"Conversion Election" Section 4.04(a)
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"Designated Directors" Section 2.03(d)
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"Effective Time" Section 3.01(a)
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"Environmental Claims" Section 5.16
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"Environmental Law" Section 5.16
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"ERISA" Section 5.11(a)
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"European Antitrust Laws" Section 5.04
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"Exchange Agent" Section 4.02
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"Exchange Fund" Section 4.03(a)
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"Governmental Authority" Section 5.04
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Terms Section
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"Hazardous Materials" Section 5.16
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"HSR Act" Section 5.04
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"Indemnified Parties" Section 7.10(b)
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"Issuance Obligation" Section 5.03(a)
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"Junior Preferred Stock" Section 6.03(a)
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"Laws" Section 5.04
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"Liens" Section 6.03(b)
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"Merger" Preamble
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"Merger Registration Statement" Section 6.06(a)
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"Merger Sub" Preamble
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"Minimum Condition" Section 2.01(a)
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"Xxxxxx Xxxxxxx" Section 2.02(a)
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"New Plans" Section 7.16(b)
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"Offer" Section 2.01(a)
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"Offer Documents" Section 2.01(b)
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"Offer Registration Statement" Section 2.01(a)
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"Old Plans" Section 7.16(b)
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"Orders" Section 5.04
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"Parent" Preamble
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"Parent Disclosure Schedule" Article VI
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"Parent Employee Benefit Plans" Section 6.10(a)
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"Parent SEC Reports" Section 6.05(a)
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"Permits" Section 5.10(b)
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"Preferred Stock" Section 6.03(a)
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"Proceedings" Section 5.08
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"Release" Section 5.16
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"Representatives" Section 7.07(a)
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"Returns" Section 5.13(a)
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"Reverse Termination Fee" Section 9.03(c)
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"Rights Agreement" Section 5.20
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"Rule 145 Affiliate" Section 7.14
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"Rule 145 Affiliate Agreement" Section 7.14
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"Schedule 14D-9" Section 2.02(b)
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"Schedule TO" Section 2.01(b)
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"Substituted Option" Section 4.04(c)
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"Superior Proposal" Section 7.07(a)
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"Surviving Corporation" Section 3.01(b)
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"Takeover Proposal" Section 7.07(a)
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"Taxes" Section 5.13(a)
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"Termination Date" Section 9.01(d)
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"Termination Fee" Section 9.03(a)
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"Third Party Acquisition Event" Section 9.03(b)
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"Transfer Taxes" Section 7.12
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"Voting Debt" Section 5.03(a)
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"VSCA" Section 2.02(a)
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ARTICLE II
THE OFFER
SECTION 2.01. The Offer. (a) Provided that this Agreement shall not
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have been terminated in accordance with Article IX, unless otherwise agreed by
Parent and the Company, no later than three Business Days following
effectiveness of a Registration Statement on Form S-4 (together with any
amendments or supplements thereto, the "Offer Registration Statement") Parent
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shall cause Merger Sub to commence an offer (the "Offer") to purchase all of the
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outstanding shares of Company Common Stock at a price for each share of Company
Common Stock of (1) $29.60, net to the seller in cash, and (2) a fraction of a
share of Parent Common Stock equal to the Exchange Ratio. The Offer shall be
subject only to (1) the condition that there shall be validly tendered in
accordance with the terms of the Offer, prior to the expiration date of the
Offer and not withdrawn, a number of shares of Company Common Stock that,
together with the shares of Company Common Stock then owned by Parent and/or
Merger Sub, represents at least two-thirds of the shares of Company Common Stock
outstanding on a fully-diluted basis (the "Minimum Condition") and (2) the other
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conditions set forth in Annex I hereto. Merger Sub shall have the right to waive
any of the conditions to the Offer and to make any change in the terms of or
conditions to the Offer; provided that (A) the Minimum Condition may not be
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waived or reduced to less than two-thirds of the shares of Company Common Stock
outstanding on a fully-diluted basis without the prior written consent of the
Company and (B) no change may be made that changes the form of consideration
payable in the Offer, decreases the consideration payable in the Offer, reduces
the maximum number of shares of Company Common Stock to be purchased in the
Offer, imposes conditions to the Offer in addition to those set forth in Annex I
or makes any other change which is adverse to the holders of Company Common
Stock. Notwithstanding the foregoing, without the consent of the Company, Merger
Sub shall have the right to extend the Offer (i) for one or more periods (not in
excess of 10 Business Days each) but in no event ending later than the
Termination Date if, at the scheduled or extended expiration date of the Offer,
any of the conditions to the Offer shall not have been satisfied or waived,
until such conditions are satisfied or waived, (ii) for any period required by
any rule, regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer or any period required by applicable law or (iii) for an
aggregate period of not more than 10 Business Days beyond the latest applicable
date that would otherwise be permitted under clause (i) or (ii) of this
sentence, if, as of such date, all of the conditions to the Offer have been
satisfied or waived, but the number of shares of Company Common Stock validly
tendered and not withdrawn pursuant to the Offer equals 80% or more, but less
than 90%, of the outstanding shares of Company Common Stock on a fully diluted
basis. In the event that Merger Sub is unable to consummate the Offer on the
initial scheduled expiration date due to the failure of the conditions to the
Offer to be satisfied or waived, Parent shall cause Merger Sub to, unless this
Agreement is terminated pursuant to Article IX, extend the Offer and set a
subsequent scheduled expiration date, and shall continue to so extend the Offer
and set subsequent scheduled expiration dates until the Termination Date.
Subject to the foregoing and upon the terms and subject to the conditions of the
Offer, Parent shall cause Merger Sub to, accept for payment and pay for, as
promptly as practicable after the expiration of the Offer, all shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Offer. Parent
will announce
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the exact Exchange Ratio with respect to each share of Company
Common Stock that is to be exchanged in the Offer by 9:00 a.m., New York City
time, on the second Trading Day immediately preceding the Acceptance Date.
Parent will make such announcement by issuing a press release to the Dow Xxxxx
News Service.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Parent shall, and Parent shall cause Merger Sub to file with the SEC
a Tender Offer Statement on Schedule TO (together with any amendments or
supplements thereto, the "Schedule TO"). As soon as reasonably practicable after
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the date hereof, Parent shall, and shall cause Merger Sub to, file the Offer
Registration Statement (the Schedule TO, the Offer Registration Statement and
such documents included therein pursuant to which the Offer will be made, the
"Offer Documents"). Parent and the Company agree promptly to correct any
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information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect. Parent shall, and Parent shall cause Merger Sub to take all steps
necessary to cause the Schedule TO and the Offer Registration Statement as so
corrected to be filed with the SEC and the other Offer Documents as so corrected
to be, at such time as reasonably agreed by Parent and the Company, disseminated
to holders of shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities laws. The Company and its counsel
shall be given an opportunity to review and comment on the Offer Documents prior
to their being filed with the SEC or disseminated to the holders of shares of
Company Common Stock. Parent shall, and Parent shall cause Merger Sub to provide
the Company and its counsel with any comments Parent and Merger Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments and shall provide the
Company and its counsel an opportunity to participate in the response of Parent
or Merger Sub to such comments.
SECTION 2.02. Company Action. (a) The Company hereby approves of and
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consents to the Offer and represents that its Board of Directors, at a meeting
duly called and held, has (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are in the
best interests of the Company's shareholders, (ii) approved and adopted this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, in accordance with the requirements of the Virginia Stock Corporation
Act (the "VSCA") and (iii) subject to Section 7.07, resolved to recommend
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acceptance of the Offer and approval of this Agreement by the Company's
shareholders. The Company further represents that Xxxxxx Xxxxxxx & Co.
Incorporated ("Xxxxxx Xxxxxxx") has delivered to the Company's Board of
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Directors its written opinion as of the date hereof that the consideration to be
received by the holders of shares of Company Common Stock pursuant to the terms
of the Offer and the Merger is fair from a financial point of view to such
holders. The Company will promptly furnish Parent with a list of its
shareholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of shares of Company
Common Stock and lists of securities positions of shares of Company Common Stock
held in stock depositories, in each case true and correct as of the most recent
practicable date, and will provide to Parent such additional information
(including updated lists of shareholders, mailing labels and lists of securities
positions) and such other assistance as Parent may reasonably request in
connection with the Offer.
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(b) The Company hereby agrees to file with the SEC contemporaneously
with the commencement of the Offer and disseminate to holders of shares of
Company Common Stock, in each case as and to the extent required by applicable
federal securities laws, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") that, subject to Section 7.07, shall reflect the
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recommendations of the Company's Board of Directors referred to in Section
2.02(a) above; provided, however, that prior to the Acceptance Date, the Board
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of Directors of the Company may amend, modify, withdraw, condition or qualify
such recommendations or may take any action or make any statement inconsistent
with such recommendations, to the extent that the majority of the Company's
Board of Directors concludes in its good faith judgment, after receiving the
advice of outside legal counsel, that it is necessary to take such action in
order to comply with its fiduciary duties to shareholders under applicable law.
The Company agrees to provide Parent and its counsel with any comments that the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments and shall provide
Parent and its counsel with an opportunity to participate in the response of the
Company to such comments. The Company and Parent each agree promptly to correct
any information provided by it for use in the Schedule 14D-9 if and to the
extent that it shall have become false or misleading in any material respect.
The Company agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to holders of shares
of Company Common Stock, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given an
opportunity to review and comment on the Schedule 14D-9 prior to its being filed
with the SEC or disseminated to holders of shares of Company Common Stock.
SECTION 2.03. Directors. (a) Effective upon the acceptance for payment of
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any shares of Company Common Stock pursuant to the Offer, Parent shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Company's Board of Directors that equals the product of (i) the
total number of directors on the Company's Board of Directors (giving effect to
the election of any additional directors pursuant to this Section 2.03) and (ii)
the percentage that the number of shares of Company Common Stock beneficially
owned by Parent and/or Merger Sub (including shares of Company Common Stock
accepted for payment) bears to the total number of shares of Company Common
Stock outstanding, and the Company shall take all action necessary to cause
Parent's designees to be elected or appointed to the Company's Board of
Directors, including increasing the number of directors, and seeking and
accepting resignations of incumbent directors. At such time, the Company will
also use its best efforts to cause individuals designated by Parent to
constitute the number of members, rounded up to the next whole number, on (i)
each committee of the Board and (ii) each board of directors of each Subsidiary
of the Company identified by Parent (and each committee thereof) that represents
the same percentage as such individuals represent on the Board of Directors of
the Company, in each case only to the extent permitted by applicable law.
Notwithstanding the provisions of this Section 2.03, the parties hereto shall
use their respective best efforts to ensure that at least two of the members of
the Company's Board of Directors shall, at all times prior to the Effective
Time, be directors of the Company who were directors of the Company on the date
hereof (the "Continuing Directors"); provided that if there shall be in office
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fewer than two Continuing Directors for any reason, the Company's Board of
Directors shall cause a person designated by the remaining Continuing Director
to fill such vacancy who shall be deemed to be a Continuing Director for all
purposes of this Agreement, or if no Continuing
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Directors then remain, the other directors of the Company then in office shall
designate two persons to fill such vacancies who will not be officers or
employees or Affiliates of the Company, Parent or Merger Sub or any of their
respective Subsidiaries and such persons shall be deemed to be Continuing
Directors for all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees to the
Company's Board of Directors shall be subject to Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions, and shall include in the Schedule 14D-9 such information with respect
to the Company and its officers and directors, as Section 14(f) and Rule 14f-1
require in order to fulfill its obligations under this Section, so long as
Parent shall have provided to the Company on a timely basis in writing and be
solely responsible for any information with respect to itself, Merger Sub and
their respective nominees, officers, directors and Affiliates required by
Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees pursuant
to Section 2.03(a) and until the Effective Time, the approval of a majority of
the Continuing Directors shall be required to authorize any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Company's Board of Directors, any extension of time for performance of any
obligation or action hereunder by Parent or Merger Sub, any waiver of compliance
with any of the agreements or conditions contained herein for the benefit of the
Company, any consent or action by the Board of Directors of the Company
hereunder and any other action of the Company hereunder which adversely affects
the holders of shares of Company Common Stock (other than Parent or Purchaser).
(d) Parent shall take such action as shall be necessary so that, at the
Effective Time, the number of directors comprising each class of directors of
the Board of Directors of Parent shall be increased from four to five, and three
individuals from among the present directors of the Company (the "Designated
----------
Directors") who shall be agreed upon by Parent and the Company shall be
---------
appointed to the Board of Directors of Parent to fill the vacancies created by
such newly created directorships having terms expiring at the Company's annual
meetings of shareholders to be held in 2001, 2002 and 2003. The Company hereby
agrees to provide to Parent as soon as practicable any information in respect of
the Designated Directors as Parent shall reasonably request.
ARTICLE III
THE MERGER
SECTION 3.01. The Merger. (a) Upon the terms and subject to the
------------- ----------
conditions of this Agreement, as soon as practicable after satisfaction or, to
the extent permitted hereby, waiver of all conditions to the Merger set forth
herein, Parent shall cause articles of merger (the "Articles Of Merger") to be
------------------
duly prepared, executed and acknowledged by Merger Sub and the Company in
accordance with the VSCA and filed with the State Corporation Commission of
Virginia. The Merger shall become effective upon the filing of the Articles of
Merger (or at such later time reflected in such Articles of Merger as shall be
agreed to by Parent and the Company).
9
The date and time when the Merger shall become effective is hereinafter referred
to as the "Effective Time."
--------------
(b) At the Effective Time, Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall cease, and the
Company shall continue as the surviving corporation under the laws of the
Commonwealth of Virginia (the "Surviving Corporation").
---------------------
(c) From and after the Effective Time, the Merger shall have the effects
set forth in this Agreement and in Section 13.1-721 of the VSCA.
SECTION 3.02. Articles of Incorporation of the Surviving Corporation. The
------------- ------------------------------------------------------
Articles of Incorporation of the Merger Sub, as in effect immediately prior to
the Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation.
SECTION 3.03. By-Laws of the Surviving Corporation. The By-Laws of the
------------- ------------------------------------
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
By-Laws of the Surviving Corporation.
SECTION 3.04. Directors and Officers of the Surviving Corporation. At the
------------- ---------------------------------------------------
Effective Time, the directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, each of such directors
to hold office, subject to the applicable provisions of the VSCA and the
Articles of Incorporation and By-Laws of the Surviving Corporation, until the
next annual shareholders' meeting of the Surviving Corporation and until their
respective successors shall be duly elected or appointed and qualified. At the
Effective Time, the officers of the Company immediately prior to the Effective
Time shall, subject to the applicable provisions of the Articles of
Incorporation and By-Laws of the Surviving Corporation, be the officers of the
Surviving Corporation until their respective successors shall be duly elected or
appointed and qualified.
SECTION 3.05. Closing. The closing of the Merger (the "Closing") shall be
------------- ------- -------
held at the offices of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 as soon as practicable, but in any event within three Business Days
after the last of the conditions (excluding conditions that, by their nature,
cannot be satisfied until the Closing Date) set forth in Article VIII hereof is
satisfied or waived or at such other time and date as the parties hereto shall
agree in writing. Such date is herein referred to as the "Closing Date."
------------
ARTICLE IV
CONVERSION OF SHARES AND RELATED MATTERS
SECTION 4.01. Conversion of Capital Stock. At the Effective Time, by
------------- ---------------------------
virtue of the Merger:
(a) Cancellation of Treasury Stock and Stock Owned by Parent and Merger
-------------------------------------------------------------------
Sub. All shares of Company Common Stock owned by the Company as treasury stock
---
and any
10
shares of Company Common Stock owned by Parent, Merger Sub or any
Subsidiary of Parent or Merger Sub immediately prior to the Effective Time
shall, by virtue of the Merger, and without any action on the part of the holder
thereof, no longer be outstanding, shall be canceled and retired without payment
of any consideration therefor and shall cease to exist.
(b) Capital Stock of Merger Sub. Each share of Merger Sub Common Stock
---------------------------
outstanding immediately prior to the Effective Time shall be converted into and
become one share of common stock of the Surviving Corporation.
(c) Conversion of Company Common Stock. Except as provided in clause (a)
----------------------------------
of this Section 4.01, each share of Company Common Stock outstanding immediately
prior to the Effective Time shall be converted into and shall be canceled in
exchange for the right to receive from Parent the same amount of cash and the
same number of shares of Parent Common Stock as paid for each share of Company
Common Stock in the Offer. At the Effective Time, all Company Common Stock shall
no longer be outstanding, shall be canceled and retired and shall cease to
exist, and each certificate (a "Certificate") that formerly represented such
-----------
shares of Company Common Stock shall thereafter represent only the right to
receive cash and the number of whole shares of Parent Common Stock into which
the Company Common Stock represented by such Certificate is converted pursuant
to this Section 4.01(c) and the right, if any, to receive pursuant to Section
4.03(e) cash in lieu of a fractional share of Parent Common Stock and any
dividend or distribution pursuant to Section 4.03(c), in each case without
interest.
(d) In the event that, subsequent to the date of this Agreement but
prior to the Effective Time, the Company changes the number of shares of Company
Common Stock, or Parent changes the number of shares of Parent Common Stock,
issued and outstanding as a result of a stock split, stock combination, stock
dividend, recapitalization, redenomination of share capital or other similar
transaction, the consideration paid in the Offer and the Merger and other items
dependent thereon shall be appropriately adjusted.
SECTION 4.02. Exchange of Shares. Prior to the Effective Time, Parent
------------- -------------------
shall appoint a bank or trust company reasonably acceptable to the Company as
exchange agent (the "Exchange Agent") for the purposes of exchanging the
--------------
Certificates for cash and the whole number of shares of Parent Common Stock into
which the shares of Company Common Stock formerly represented thereby have been
converted and cash in lieu of fractional shares of Parent Common Stock. Promptly
after the Effective Time, Parent will send, or will cause the Exchange Agent to
send, to each holder of record of Company Common Stock as of the Effective Time
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent and shall be in customary form and have
such other customary provisions as the Surviving Corporation or Parent may
reasonably specify) providing instructions for use in effecting the surrender of
Certificates in exchange for cash and the whole number of shares of Parent
Common Stock into which the shares of Company Common Stock formerly represented
thereby have been converted and cash in lieu of a fractional share of Parent
Common Stock.
SECTION 4.03. Exchange of Certificates. (a) Exchange Agent. On or prior
------------- ------------------------ --------------
to the Effective Time, Parent shall deposit with the Exchange Agent (i) as
nominee for the benefit of the holders of Company Common Stock, the aggregate
amount of cash and the aggregate
11
number of shares of Parent Common Stock to be issued pursuant to Section
4.01(c) and (ii) an amount of cash sufficient to permit the Exchange Agent to
make the necessary payments of cash in lieu of fractional shares of Parent
Common Stock in accordance with Section 4.03(e) (such cash and shares of Parent
Common Stock, together with any dividends or distributions with respect thereto
being hereinafter referred to as the "Exchange Fund"), to be held for the
-------------
benefit of and distributed to the holders of Company Common Stock in accordance
with this Section 4.03. The Exchange Agent shall invest any cash included in the
Exchange Fund as directed by the Surviving Corporation on a daily basis in
direct obligations of the United States, obligations for which the full faith
and credit of the United States is pledged to provide for the payment of
principal and interest, commercial paper rated the highest quality by Xxxxx'x
Investors Services, Inc. or Standard & Poor's Ratings Group or certificates of
deposit, bank repurchase agreements or bankers' acceptances of a commercial bank
having at least $100,000,000 in assets, or in money market funds which are
invested in the foregoing; provided that no such investment or loss thereon
--------
shall affect the amounts payable to the Company's shareholders pursuant to this
Article IV. Parent and the Surviving Corporation shall replace any monies lost
through an investment made pursuant to this Section 4.03. Any interest and other
income resulting from such investments shall promptly be paid to the Surviving
Corporation.
(b) Exchange Procedures. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with the letter of transmittal
referred to in Section 4.02 duly executed and completed in accordance with its
terms, and such other documents as may reasonably be required by the Exchange
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor (i) the amount of cash and a certificate or certificates representing
the whole number of shares of Parent Common Stock into which the shares of
Company Common Stock represented by such Certificate have been converted in
accordance with Section 4.01(c), (ii) the amount of dividends or other
distributions, if any, with a record date on or after the Effective Time which
theretofore became payable with respect to such shares of Parent Common Stock,
and (iii) the cash amount payable in lieu of a fractional share of Parent Common
Stock in accordance with Section 4.03(e), in each case which such holder has
the right to receive pursuant to the provisions of this Article IV, and the
Certificate so surrendered shall forthwith be canceled. In no event shall the
holder of any Certificate be entitled to receive interest on any funds to be
received in the Merger. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company, the amount of cash and a certificate or certificates representing that
whole number of shares of Parent Common Stock into which such shares of Company
Common Stock have been converted in accordance with Section 4.01(c), plus the
cash amount payable in lieu of a fractional share of Parent Common Stock in
accordance with Section 4.03(e), may be issued to a transferee if the
Certificate representing such Company Common Stock is presented to the Exchange
Agent accompanied by all documents required to evidence and effect such transfer
and by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 4.03(b) and subject to Section 4.03
(c), each Certificate shall, after the Effective Time, represent for all
purposes only the right to receive the amount of cash and the whole number of
shares of Parent Common Stock into which the number of shares of Company Common
Stock shown thereon has been converted in accordance with Section 4.01(c), plus
the cash amount payable in lieu of a fractional share of Parent Common Stock in
accordance with Section 4.03(e). Notwithstanding the foregoing, certificates
representing Company Common Stock surrendered for exchange by any Person
constituting a "Rule 145 Affiliate" of the
12
Company for purposes of Section 7.14 shall not be exchanged until Parent has
received a Rule 145 Affiliate Agreement (as defined in Section 7.14) as
provided in Section 7.14.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
------------------------------------------------
other distributions declared, made or paid after the Effective Time with respect
to shares of Parent Common Stock with a record date on or after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock represented thereby and no cash payment in
lieu of a fractional share of Parent Common Stock shall be paid to any such
holder pursuant to Section 4.03(e) until the holder of record of such
Certificate shall surrender such Certificate in accordance with this Section.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing shares of Parent Common Stock, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions, if any, with a
record date on or after the Effective Time which theretofore became payable, but
which were not paid by reason of the immediately preceding sentence, with
respect to such shares of Parent Common Stock and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
on or after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such shares of Parent Common
Stock. Dividends or other distributions with a record date on or after the
Effective Time but prior to surrender of Certificates by holders thereof payable
in respect of shares of Parent Common Stock held by the Exchange Agent shall be
held in trust for the benefit of such holders of Certificates.
(d) No Further Ownership Rights in Company Common Stock. All shares of
---------------------------------------------------
Parent Common Stock issued and all cash paid upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 4.03(e)) shall be deemed to have been issued at the
Effective Time in full satisfaction of all rights pertaining to the shares of
Company Common Stock represented thereby, subject to the Surviving Corporation's
obligation to pay any dividends which may have been declared by the Company on
the shares of Company Common Stock in accordance with the terms of this
Agreement and which remained unpaid at the Effective Time. From and after the
Effective Time, the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers thereon of the shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Section 4.03.
(e) No Fractional Shares. No certificate or scrip representing
--------------------
fractional shares of Parent Common Stock will be issued in the Offer or the
Merger upon the surrender for exchange of Certificates, and such fractional
shares of Parent Common Stock will not entitle the owner thereof to vote or to
any rights of a holder of shares of Parent Common Stock. In lieu of any such
fractional shares of Parent Common Stock, each holder of Certificates who would
otherwise have been entitled to a fraction of a share of Parent Common Stock in
exchange for such Certificates (after taking into account all Certificates
delivered by such holder) pursuant to this Section 4.03 shall receive from the
Exchange Agent, as applicable, a cash payment in lieu of such fractional share
of Parent Common Stock, determined by multiplying (i) the Average Price by (ii)
the fraction of a share of Parent Common Stock to which such holder would
otherwise be entitled.
13
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
----------------------------
remains undistributed to the shareholders of the Company for one year after the
Effective Time shall be delivered to or as directed by Parent, upon demand, and
any holders of Certificates who have not theretofore complied with this Article
IV shall thereafter look only to Parent for payment of their claim for shares of
Parent Common Stock, any cash in lieu of a fractional share of Parent Common
Stock and any dividends or distributions with respect to shares of Parent Common
Stock. Neither Parent nor the Surviving Corporation shall be liable to any
holder of any Certificate for cash or shares of Parent Common Stock (or
dividends or distributions with respect thereto), or cash payable in respect of
a fractional share of Parent Common Stock, delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. Any
securities or cash amounts remaining unclaimed by holders of Certificates five
years after the Effective Time (or such earlier date immediately prior to such
time as such amounts would otherwise escheat to or become property of any
governmental entity) shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation free and clear of any claims or
interest of any Person previously entitled thereto.
(g) Lost, Stolen or Destroyed Certificates. If any Certificate shall
--------------------------------------
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such person of a bond in such
reasonable amount as Parent may direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent will
deliver in exchange for such lost, stolen or destroyed Certificate the cash and
the whole number of shares of Parent Common Stock into which the shares of
Company Common Stock formerly represented thereby have been converted, any cash
in lieu of a fractional share of Parent Common Stock, and unpaid dividends and
distributions in respect of or on shares of Parent Common Stock deliverable in
respect thereof, pursuant to this Agreement.
(h) Withholding Rights. Each of the Surviving Corporation and Parent
------------------
shall be entitled to deduct and withhold from the cash and the shares of Parent
Common Stock (and any dividends or distributions thereon) and cash in lieu of a
fractional share of Parent Common Stock otherwise payable hereunder to any
holder of Certificates in respect of the shares of Company Common Stock formerly
represented thereby such amounts as it is required to deduct and withhold with
respect to the making of such payment under any provision of federal, state,
local or foreign income tax law. To the extent that the Surviving Corporation or
Parent so withholds those amounts, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of Company
Common Stock in respect of which such deduction and withholding was made by the
Surviving Corporation or Parent, as the case may be.
SECTION 4.04. Stock Options and Other Stock Plans.
------------- -----------------------------------
(a) Company Options. Not less than five Business Days prior to the
---------------
occurrence of a change of control, each holder of a Company Option shall have
the right to elect either of the following alternatives with respect to such
Company Options by delivering a written election to the Company: (i) that their
options be cashed out, in whole or in part, in the manner described below (the
"Cashout Election") or (ii) that their options be exchanged, in whole or in
-----------------
part, for options to purchase Parent Common Stock in the manner described below
(the
14
"Conversion Election"). In the event that any holder of a Company Option
-------------------
does not make an election as provided for in this Section 4.04(a), such holder
shall be deemed to have made a Cashout Election with respect to such holder's
Company Options.
(b) In the event an optionee elects the Cashout Election, on the
Acceptance Date the Company shall terminate or cancel all Company Options to
which the Cashout Election relates that are outstanding and unexercised as of
such date as set forth in Section 4.04 of the Company Disclosure Schedule. Each
Company Option that is outstanding and unexercised on the Acceptance Date as to
which the holder thereof has made a Cashout Election shall be cancelled on the
Acceptance Date, and the holder thereof shall receive in exchange for the
cancellation of such Company Option, an amount in cash equal to (i) the excess,
if any, of (1) the Per Share Amount over (2) the per share exercise price of
such Company Option, multiplied by (ii) the number of shares of Company Common
Stock subject to such Company Option as of the Acceptance Date. Any such payment
shall be subject to all applicable federal, state and local tax employee
withholding requirements. In the event that an optionee elects the Cashout
Election with respect to a portion of the Company Options held thereby, the
remaining Company Options held by such optionee shall be exchanged for options
of Parent Common Stock pursuant to Section 4.04(c).
(c) In the event an optionee elects the Conversion Election, prior to
the Effective Time Parent and the Company shall take such action as may be
necessary to cause each Company Option to which the Conversion Election relates
to be automatically converted at the Effective Time into an option ("Substituted
-----------
Option") to purchase a number of shares of Parent Common Stock equal to the
------
product of (i) the number of shares of Company Common Stock that could have been
purchased (assuming full vesting) under such Company Option immediately prior to
the Effective Time multiplied by (ii) the quotient of (1) the Per Share Amount
divided by (2) the Average Price (rounded up to the nearest whole number of
shares of Parent's Common Stock), at a price per share of Parent's Common Stock
equal to the quotient of (x) the per-share option exercise price specified in
the Company Option divided by (y) (1) the Per Share Amount divided by (2) the
Average Price (rounded down to the nearest whole cent). Except as otherwise
provided in this Agreement, such Substituted Option shall be subject to the same
terms and conditions as such Company Option. Such Substituted Options shall be
subject to any other rights which arise under the Company Employee Benefit
Plans, the option agreements evidencing awards thereunder as a result of the
transactions contemplated by this Agreement or otherwise, including the full
vesting of such Company Options to the extent provided in such plans or
agreements. As promptly as reasonably practicable after the Effective Time,
Parent shall issue to each holder of an outstanding Company Option a document
evidencing the foregoing assumption by Parent. In the event that an optionee
elects the Conversion Election with respect to a portion of the Company Options
held thereby, the remaining Company Options held by such optionee shall be
cashed-out pursuant to Section 4.04(b).
(d) In respect of each Substituted Option and the shares of Parent
Common Stock underlying such option, Parent shall file as promptly as
practicable, and in no event later than the second Business Day after the
Closing Date, and keep current, a Form S-8 or other appropriate registration
statement for as long as any Substituted Options remain outstanding. In
connection with the issuance of Substituted Options, Parent shall, by action of
the Board of
15
Directors of Parent, reserve for issuance the number of shares of
Parent Common Stock that will become subject to Substituted Options pursuant to
this Section 4.04.
(e) Prior to the Effective Time, the Company shall take such steps
reasonably necessary, including amendment of the plans and agreements governing
the terms of the Company Options, to accomplish the disposition of the Company
Options pursuant to this Section 4.04, including the Cashout Election and the
Conversion Election. In addition, prior to the Effective Time, the Company shall
amend each outstanding Company Option to provide that in the event the option
holder's employment is involuntarily terminated following the Acceptance Date
other than for cause or in the event that an employee terminates his or her
employment for "good reason" as such term is defined in such employee's
employment agreement, the exercise period for such option shall end on the three
year anniversary of the Acceptance Date or the last day of the original term of
the Company Option, whichever occurs first.
(f) Phantom Share Units and Restricted Stock. On the Acceptance Date,
----------------------------------------
the Company shall terminate or cancel all performance shares and restricted or
performance share units and, to the extent provided for in the award agreement,
all restricted stock, and each holder of such stock or units that are
outstanding, whether or not such stock or units are free of restrictions, shall
be entitled to receive on the Acceptance Date, in exchange for the cancellation
of such stock or units, an amount in cash equal to the product of (1) the mean
of the high and low sales price on the Acceptance Date of Company Common Stock
and (2) the number of shares or units subject to such award. Any such payment
shall be subject to all applicable federal, state and local tax employee
withholding requirements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company's disclosure schedule delivered
concurrently with the delivery of this Agreement (the "Company Disclosure
------------------
Schedule"), the Company hereby represents and warrants to Parent as follows:
--------
SECTION 5.01. Due Organization, Good Standing and Corporate Power. The
------------- ---------------------------------------------------
Company and each of its Subsidiaries is a corporation or legal entity duly
organized, validly existing and in good standing (with respect to jurisdictions
which recognize the concept of good standing) under the laws of the jurisdiction
of its incorporation and each such Person has all requisite corporate,
partnership or similar power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect. The Company and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified or licensed and in good
standing would not reasonably be expected to, individually or in the aggregate,
have a Company Material Adverse Effect. Other than as set forth in Section 5.01
of the Company Disclosure Schedule, the respective Articles of
16
Incorporation and By-Laws or other organizational documents of the Significant
Subsidiaries of the Company do not contain any provision limiting or otherwise
restricting the ability of the Company to control such Subsidiaries. As soon as
practicable after the date hereof the Company will provide Parent with a list of
all Subsidiaries of the Company and their respective jurisdictions of
incorporation or organization which identifies the Company's (direct or
indirect) percentage of equity ownership therein. The copies of the Company's
Articles of Incorporation and By-Laws that are set forth as exhibits to the
Company's Form 10-K for the year ended December 26, 1999 are complete and
correct copies thereof. Such Articles of Incorporation and By-Laws are in full
force and effect on the date hereof, and have not been amended, modified or
rescinded.
SECTION 5.02. Authorization and Validity of Agreement. The Company has
-----------------------------------------------------
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and, subject to obtaining the
Company Shareholder Approval, to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the
Company, and the consummation by it of the transactions contemplated hereby,
have been duly authorized and approved by its Board of Directors and no other
corporate action on the part of the Company is necessary to authorize the
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby, other than obtaining the
Company Shareholder Approval. This Agreement has been duly executed and
delivered by the Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
SECTION 5.03. Capitalization. (a) The authorized capital stock of the
----------------------------
Company consists of 500,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $10 per share (the "Company Preferred
-----------------
Stock"), 250,000 shares of which have been designated Series M Cumulative
-----
Participating Preferred Stock. At the close of business on July 13, 2000: (i)
204,712,356 shares of Company Common Stock were issued and outstanding, (ii)
12,067,171 shares of Company Common Stock were issuable pursuant to outstanding
awards under the Company's stock option and stock benefit plans and arrangements
and (iii) no shares of Company Preferred Stock were issued and outstanding. All
issued and outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
set forth above or in Section 5.03(a) of the Company Disclosure Schedule or as
required by local law and other than the Company Rights, there are no
outstanding or authorized options, warrants, rights, subscriptions, claims of
any character, agreements, obligations, convertible or exchangeable securities,
or other commitments, contingent or otherwise, relating to shares of capital
stock or other equity interests of the Company or any of its Significant
Subsidiaries, pursuant to which the Company or any of its Subsidiaries is or may
become obligated to issue shares of its capital stock or other equity interests
or any securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of the capital stock or other equity interests of the
Company or any of its Significant Subsidiaries (each an "Issuance Obligation").
-------------------
Except as set forth in Section 5.03(a) of the Company Disclosure Schedule, there
are no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding securities of
17
the Company or any of its Significant Subsidiaries. The Company has no
authorized or outstanding bonds, debentures, notes or other indebtedness the
holders of which have the right to vote (or convertible or exchangeable into or
exercisable for securities the holders of which have the right to vote) with the
shareholders of the Company on any matter ("Voting Debt"). Except as set forth
in Section 5.03(a) of the Company Disclosure Schedule, there are no restrictions
of any kind which prevent or restrict the payment of dividends by the Company or
any of its Significant Subsidiaries and there are no limitations or restrictions
on the right to vote, sell or otherwise dispose of the capital stock or other
ownership interests of the Company or its Significant Subsidiaries.
(b) All of the issued and outstanding shares of capital stock of each
Subsidiary are validly existing, fully paid and non-assessable. Except as set
forth in the Company SEC Reports filed on or before the date hereof or in
Section 5.03(b) of the Company Disclosure Schedule, no Significant Subsidiary of
the Company has outstanding Voting Debt and there are no obligations of the
Company or any of its Significant Subsidiaries to repurchase, redeem or
otherwise acquire any outstanding securities of any of its Significant
Subsidiaries or any capital stock of, or other ownership interests in, any of
its Significant Subsidiaries.
(c) Except for the Company's interest in its Subsidiaries, and as set
forth in Section 5.03(c) of the Company Disclosure Schedule, the Company does
not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture, limited
liability company or other business association or entity which is material to
the Company and its Subsidiaries, taken as a whole.
SECTION 5.04. Consents and Approvals; No Violations. Assuming (i) the
---------------------------------------------------
filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), are made and the waiting periods thereunder (if
-------
applicable) have been terminated or expired, (ii) the prior notification and
reporting requirements of antitrust or competition laws of the member states of
the European Union as may be applicable (collectively, the "European Antitrust
------------------
Laws"), if applicable, are satisfied and any antitrust filings/notifications
----
which must or may be effected at the national level in countries having
jurisdiction are made and any applicable waiting periods thereunder have been
terminated or expired, (iii) the prior notification and reporting requirements
of other antitrust or competition laws as may be applicable are satisfied and
any antitrust filings/notifications which must or may be effected in countries
having jurisdiction are made, (iv) the applicable requirements of the Securities
Act and the Exchange Act are met, (v) the requirements under any applicable
foreign or state securities or blue sky laws are met, (vi) the filing of the
Articles of Merger and other appropriate merger documents, if any, as required
by the VSCA, are made, (vii) in the case of this Agreement, the Company
Shareholder Approval is received, (viii) the requirements of any applicable
state law relating to the transfer of contaminated property are met and (ix) as
otherwise set forth in Section 5.04 to the Company Disclosure Schedule, the
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby do not and will not: (A)
violate or conflict with any provision of the Company's Articles of
Incorporation or the Company's By-Laws or the comparable governing documents of
any of its Significant Subsidiaries; (B) violate or conflict with any statute,
law, ordinance, rule or regulation (collectively, "Laws") or any order,
----
judgment, decree, writ, permit or license
18
(collectively, "Orders"), of any court, tribunal, arbitrator, authority,
------
agency, commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision (a "Governmental Authority") applicable to the Company or
----------------------
any of its Subsidiaries or by which any of their respective properties or assets
may be bound; (C) except as provided above or as set forth in Section 5.04 of
the Company Disclosure Schedule, require any filing with, or permit, consent or
approval of, or the giving of any notice to, any Governmental Authority; or (D)
except as set forth in Section 5.04 of the Company Disclosure Schedule, result
in a violation or breach of, conflict with, constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, payment or acceleration) under, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries under, or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a material
benefit under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, contract, lease,
franchise agreement or other instrument or obligation of any kind (collectively,
"Contracts") to which the Company or any of its Subsidiaries is a party, or by
---------
which any such Person or any of its properties or assets are bound, excluding
from the foregoing clauses (B), (C) and (D), conflicts, violations, breaches,
defaults, rights of payment and reimbursement, terminations, modifications,
accelerations and creations and impositions of Liens which, and filings,
permits, consents, approvals or notices, the failure to have made or received,
would not reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect; provided, however, that for purposes of this
-------- -------
Section 5.04, the definition of "Company Material Adverse Effect" shall be read
so as not to include clause (ii)(B) thereof.
SECTION 5.05. Company Reports and Financial Statements. (a) Since
------------------------------------------------------
December 28, 1997, the Company and, to the extent applicable, its Subsidiaries,
have filed all forms, reports and documents with the SEC required to be filed by
it pursuant to the federal securities laws and the SEC rules and regulations
thereunder, and all forms, reports, schedules, registration statements and other
documents filed with the SEC by the Company and, to the extent applicable, its
Subsidiaries have complied in all material respects with all applicable
requirements of the federal securities laws and the SEC rules and regulations
promulgated thereunder, each as in effect on the date such forms, reports and
documents were filed. The Company has, prior to the date of this Agreement, made
available to Parent true and complete copies of all forms, reports, registration
statements and other filings filed by the Company and its Subsidiaries with the
SEC since December 28, 1997 (such forms, reports, registration statements and
other filings, together with any exhibits, any amendments thereto and
information incorporated by reference therein, are sometimes collectively
referred to as the "Company SEC Reports"). As of their respective dates, the
-------------------
Company SEC Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and the
unaudited consolidated interim financial statements of the Company included in
the Company SEC Reports were prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated therein or in the notes or
schedules thereto) and present fairly, in all material respects, the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and their consolidated results of operations and changes
in financial position for the periods then ended subject, in the case of the
unaudited interim financial statements, to normal
19
and recurring year-end adjustments. The Company has heretofore provided
Parent with true and correct copies of any material amendments and/or
modifications to any Company SEC Reports which have not yet been filed with the
SEC but that are required to be filed with the SEC in accordance with applicable
federal securities laws and the SEC rules.
(b) Except as set forth or provided in the Company SEC Reports filed
prior to the date of this Agreement or in Section 5.05(b) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise), in each case that is required by GAAP to be set forth on a
consolidated balance sheet of the Company, except for (i) liabilities or
obligations disclosed or provided for in the Company SEC Reports filed prior to
the date of this Agreement; (ii) liabilities or obligations under this Agreement
or incurred in connection with the transactions contemplated hereby and (iii)
liabilities or obligations which would not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect. Except
as set forth in Section 5.05(b) of the Company Disclosure Schedule, as of the
date hereof, neither the Company nor any of its Subsidiaries is in default in
respect of the material terms and conditions of any indebtedness or other
agreement which would reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect.
SECTION 5.06. Information to Be Supplied. (a) Each of the Schedule 14D-9
------------- --------------------------
and the Proxy Statement/Prospectus and the other documents required to be filed
by the Company with the SEC in connection with the Offer, the Merger and the
other transactions contemplated hereby will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act, as
the case may be, and will not, on the date of its filing or, in the case of the
Proxy Statement/Prospectus, on the dates it is mailed to shareholders of the
Company and at the time of the Company Shareholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 5.06, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Merger Registration Statement, the
Proxy Statement/Prospectus or the Schedule 14D-9 based on information supplied
by Parent or Merger Sub for inclusion or incorporation by reference therein or
based on information which is not made in or incorporated by reference in such
documents but which should have been disclosed pursuant to Section 6.06.
SECTION 5.07. Absence of Certain Events. Except as disclosed in the
------------- -------------------------
Company SEC Reports filed on or before the date hereof or in Section 5.07 of the
Company Disclosure Schedule or as required or expressly permitted by this
Agreement, since December 26, 1999, the Company and its Subsidiaries have
operated their respective businesses only in the ordinary course and there has
not occurred (i) any event, occurrence, change or development which would
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect; (ii) any damage, destruction or loss which,
individually or in the aggregate, resulted in or would reasonably be expected to
result in, a Company Material Adverse Effect; or (iii) any increase in the
compensation of, or change of control agreement with, any officer of the Company
or any of its Subsidiaries or, other than in the ordinary course
20
of business, any general salary or benefits increase to the employees of the
Company or any of its Subsidiaries.
SECTION 5.08. Litigation. Except as disclosed in Section 5.08 of the
------------- ----------
Company Disclosure Schedule or in the Company SEC Reports filed prior to the
date hereof, there are no investigations, actions, suits or proceedings
("Proceedings") pending against the Company or its Subsidiaries or, to the
-----------
knowledge of the Company, threatened against the Company or its Subsidiaries (or
any of their respective properties, rights or franchises), at law or in equity,
or before or by any federal or state commission, board, bureau, agency,
regulatory or administrative instrumentality or other Governmental Authority or
any arbitrator or arbitration tribunal, that would reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect, and,
to the knowledge of the Company, no development has occurred with respect to any
pending or threatened Proceeding that would reasonably be expected to result in
a Company Material Adverse Effect or would reasonably be expected to prevent,
materially impair or materially delay the consummation of the transactions
contemplated hereby. Except as disclosed in the Company SEC Reports filed prior
to the date hereof, neither the Company nor any of its Subsidiaries is subject
to any Order entered in any proceeding which would reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect. The
foregoing does not apply to any Proceeding or Order arising in connection with
or as a result of the execution of this Agreement or the commencement of the
Offer or the consummation of the other transactions contemplated hereby.
SECTION 5.09. Title to Properties; Encumbrances. Except as disclosed in
------------- ---------------------------------
Section 5.09 of the Company Disclosure Schedule, the Company and each of its
Significant Subsidiaries has good, valid and marketable title to, or, in the
case of leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets except where the failure to have such good, valid
and marketable title would not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect; in each case subject to no
Liens, except for (a) Liens reflected in the consolidated balance sheet as of
December 26, 1999, (b) Liens consisting of zoning or planning restrictions,
easements, permits and other restrictions or limitations on the use of real
property or irregularities in title thereto which do not materially detract from
the value of, or materially impair the use of, such property by the Company or
any of its Significant Subsidiaries in the operation of its respective business,
(c) Liens for current Taxes, assessments or governmental charges or levies on
property not yet due or which are being contested in good faith and (d) Liens
which would not reasonably be expected to, individually or in the aggregate,
have a Company Material Adverse Effect. Except as would not reasonably be
expected to, individually or in the aggregate, have a Company Material Adverse
Effect, (i) the Company and each of its Significant Subsidiaries are in
compliance with the terms of all leases of tangible properties to which they are
a party and under which they are in occupancy, and all such leases are in full
force and effect and (ii) the Company and each of its Significant Subsidiaries
enjoys peaceful and undisturbed possession under all such leases.
SECTION 5.10. Compliance with Laws. Except as disclosed in the Company
------------- --------------------
SEC Reports or Section 5.10 of the Company Disclosure Schedule, (a) the Company,
each of its Significant Subsidiaries, the North American Tissue division and the
Xxxxx division are in compliance with all applicable Laws and Orders, except
where the failure to so comply would
21
not reasonably be expected to, individually or in the aggregate, have a
material adverse effect upon the business, operations or financial condition of
the Company, any of its Significant Subsidiaries, the North American Tissue
division or the Xxxxx division, and (b) the Company, each of its Significant
Subsidiaries, the North American Tissue division and the Xxxxx division hold, to
the extent legally required, all federal, state, local and foreign permits,
approvals, licenses, authorizations, certificates, rights, exemptions and orders
from Governmental Authorities (the "Permits") that are required for the
-------
operation of the respective businesses of the Company, each of its Significant
Subsidiaries, the North American Tissue division and the Xxxxx division as now
conducted, except where the failure to hold any such Permit would not reasonably
be expected to, individually or in the aggregate, have a material adverse effect
upon the business, operations or financial condition of the Company, any of its
Significant Subsidiaries, the North American Tissue division or the Xxxxx
division, and there has not occurred any default under any such Permit, except
to the extent that such default would not reasonably be expected to,
individually or in the aggregate, have a material adverse effect upon the
business, operations or financial condition of the Company, any of its
Significant Subsidiaries, the North American Tissue division or the Xxxxx
division.
SECTION 5.11. Company Employee Benefit Plans. (a) Except as set forth in
------------- ------------------------------
Section 5.11(a) of the Company Disclosure Schedule, (i) each employee benefit
plan subject to or governed by the laws of any jurisdiction outside of the
United States or any State or Commonwealth of the United States, (ii) each
employee benefit plan, within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations thereunder ("ERISA"), whether or not subject to ERISA, and (iii)
-----
each foreign or domestic stock option, stock appreciation right, restricted
stock, stock purchase, stock unit, performance share, incentive, bonus,
profit-sharing, savings, deferred compensation, health, medical, dental, life
insurance, disability, accident, supplemental unemployment or retirement,
employment, severance, termination or salary or benefits continuation or fringe
benefit plan, program, arrangement, contract or agreement maintained by the
Company or any Affiliate thereof (including, for this purpose and for the
purpose of all of the representations in this Section 5.11, all employers
(whether or not incorporated) that would be treated together with the Company
and/or any such Affiliate as a single employer within the meaning of Section 414
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder (the "Code")) or to which the Company or any Affiliate thereof
----
contributes (or has any obligation to contribute), has any liability or is a
party (collectively, the "Company Employee Benefit Plans") is in compliance
------------------------------
with all applicable Laws (including, without limitation, ERISA and the Code) and
has been administered and operated in accordance with its terms, in each case
except as would not, in the aggregate, have a Company Material Adverse Effect.
(b) Set forth in Section 5.11(b) of the Company Disclosure Schedule is
an accurate and complete list of (i) each material Company Employee Benefit Plan
and (ii) any material claim, action, litigation, audit, examination,
investigation or administrative proceeding that has been made or commenced or,
to the best knowledge of the Company, threatened with respect to any material
Company Employee Benefit Plan (other than routine claims for benefits in the
ordinary course).
(c) The Company has made available or will make available to Parent or its
counsel true and complete copies of each plan document related to each Company
Employee
22
Benefit Plan and any related trust agreement or funding vehicle,
together with all amendments thereto, and such other documentation with respect
to any Company Employee Benefit Plan as reasonably requested by Parent.
SECTION 5.12. Labor/Employment. Section 5.12 of the Company Disclosure
------------- ----------------
Schedule sets forth a list of all material employment, labor and collective
bargaining agreements to which the Company or any Subsidiary of the Company is a
party. The Company has heretofore made available or will make available to
Parent true and complete copies of the employment, labor and collective
bargaining agreements listed on Section 5.12 of the Company Disclosure Schedule,
together with all material amendments, modifications and supplements affecting
the duties, rights and obligations of any party thereunder. Except as would not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect or as set forth in Section 5.12 of the Company
Disclosure Schedule, (i) to the Company's knowledge, there are no organizational
campaigns, written demands or proceedings pending or, to the Company's
knowledge, threatened by any labor organization or group of employees seeking
recognition or certification as collective bargaining representative of any
group of employees of the Company or any of its Subsidiaries; (ii) there are no
strikes, or material labor disputes ongoing or, to the Company's knowledge,
threatened involving the Company or any of its Significant Subsidiaries, and the
Company and its Significant Subsidiaries has not experienced any such strike, or
material labor dispute within the past two years; and (iii) no collective
bargaining agreement is currently being negotiated by the Company or any of its
Significant Subsidiaries.
SECTION 5.13. Taxes. Except as set forth in Section 5.13 of the
------------- -----
Company Disclosure Schedule or as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect:
(a) The Company and each of its Subsidiaries has timely filed or caused
to be timely filed with the appropriate Taxing authorities all Federal income
and all other returns, statements, forms and reports for Taxes ("Returns") that
-------
are required to be filed by, or with respect to, the Company and such
Subsidiaries on or prior to the Closing Date. The Returns as filed were correct
and complete in all respects. "Taxes" shall mean all taxes, assessments,
-----
charges, duties, fees, levies or other governmental charges including, without
limitation, all Federal, state, local, foreign and other income, franchise,
profits, capital gains, capital stock, transfer, sales, use, occupation,
property, excise, severance, windfall profits, stamp, license, payroll,
withholding and other taxes, assessments, charges, duties, fees, levies or other
governmental charges of any kind whatsoever (whether payable directly or by
withholding and whether or not requiring the filing of a Return), all estimated
taxes, deficiency assessments, additions to tax, penalties and interest and
shall include any liability for such amounts as a result of being a member of a
combined, consolidated, unitary or affiliated group.
(b) All Taxes and Tax liabilities of the Company and its Subsidiaries
that have become due and payable have been timely paid or fully provided for as
a liability on the financial statements of the Company and its Subsidiaries in
accordance with GAAP.
(c) Neither the Company nor any of its Subsidiaries is the subject of an
audit, other examination, matter in controversy, proposed adjustment, refund
litigation or other
23
proceeding with respect to Taxes by the Tax authorities of any nation, state or
locality which could reasonably be expected to result in a Tax liability, nor
has the Company or any of its Subsidiaries received any notices from any Tax
authority relating to any issue which could reasonably be expected to result in
a Tax liability.
(d) All Taxes which the Company or any of its Subsidiaries is (or was)
required by law to withhold or collect have been duly withheld or collected, and
have been timely paid over to the proper authorities to the extent due and
payable.
(e) There are no Tax sharing, allocation, indemnification or similar
agreements (in writing) in effect as between the Company, any of its
Subsidiaries, or any predecessor or Affiliate of any of them and any other party
under which the Company (or any of its Subsidiaries) could be liable for any
Taxes of any party other than the Company or any Subsidiary of the Company.
(f) No election under Section 341(f) of the Code has been made or shall
be made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the Code.
(g) There are no outstanding rulings of, or requests for rulings with,
any Tax Authority addressed to the Company or any of its Subsidiaries that are,
or if issued would be, binding on the Company or any of its Subsidiaries.
(h) There have been no distributions intended to qualify as tax-free
under Section 355 of the Code, involving the Company as either the distributing
or distributed corporation within the past two years.
SECTION 5.14. Intellectual Property. Except as would not, individually or
------------- ---------------------
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect:
(a) The Company or one of its Subsidiaries exclusively owns, without
restrictions, or is licensed to use, the rights to all patents, trademarks,
trade names, service marks, copyrights together with any registrations and
applications therefor, Internet domain names, net lists, schematics,
inventories, technology, trade secrets, source codes, know-how, computer
software programs or applications including, without limitation, all object and
source codes and tangible or intangible proprietary information or material that
are used in the business of the Company and any of its Subsidiaries as currently
conducted (the "Company Intellectual Property"). Neither the Company nor any of
-----------------------------
its Subsidiaries is, or as a result of the execution, delivery or performance of
the Company's obligations hereunder will be, in violation of, or lose any rights
pursuant to, any Company Intellectual Property.
(b) Except as set forth in Section 5.14(b) of the Company Disclosure
Schedule, no claims with respect to the Company Intellectual Property have been
asserted or, to the knowledge of the Company, are threatened by any Person nor
does the Company or any of its Subsidiaries know of any valid grounds for any
bona fide claims against the use by the Company or any of its Subsidiaries of
any Company Intellectual Property, or challenging the ownership, validity,
enforceability or effectiveness of any of the Company Intellectual Property. All
granted and issued patents and all registered trademarks and service marks and
all copyrights held by the
24
Company or any of its Subsidiaries are valid, enforceable and subsisting. To the
Company's knowledge, there has not been and there is not any unauthorized
use, infringement or misappropriation of any of the Company Intellectual
Property by any third Person, including, without limitation, any employee or
former employee.
(c) Except as set forth in Section 5.14(c) of the Company Disclosure
Schedule, no owned Company Intellectual Property is subject to any outstanding
Order, or agreement restricting in any manner the licensing thereof by the
Company or any of its Subsidiaries.
SECTION 5.15. Broker's or Finder's Fee. Except for the fees of Xxxxxx
------------- ------------------------
Xxxxxxx (whose fees and expenses will be paid by the Company in accordance with
the Company's agreement with such firm, a true and correct copy of which has
been previously delivered to Parent by the Company), no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission or expense reimbursement from the Company or from any of its
Subsidiaries or any of its controlled Affiliates in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company, any of its Subsidiaries or any of its Affiliates.
SECTION 5.16. Environmental Laws and Regulations. Except as would not
------------- ----------------------------------
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect and except as set forth in Section 5.16 of the Company
Disclosure Schedule or in the Company SEC Reports filed prior to the date
hereof, (i) Hazardous Materials have not been generated, used, treated or stored
on, transported to or from or Released or disposed of on, any Company Property,
(ii) the Company and each of its Subsidiaries are in compliance with all
applicable Environmental Laws and the requirements of any permits issued under
such Environmental Laws with respect to any Company Property, (iii) there are no
past, pending or, to the Company's knowledge, threatened Environmental Claims
against the Company or any of its Subsidiaries or any Company Property and (iv)
there are no facts or circumstances, conditions or occurrences regarding the
business, assets or operations of the Company or any Company Property that could
reasonably be anticipated to form the basis of an Environmental Claim against
the Company or any of its Subsidiaries or any Company Property.
For purposes of this Agreement, (i) "Company Property" means any real
----------------
property and improvements owned, leased or operated by the Company or any of its
Subsidiaries; (ii) "Hazardous Materials" means (A) any petroleum or petroleum
-------------------
products, radioactive materials, asbestos in any form
that is or could become friable, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(B) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "extremely hazardous substances," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," or words of similar
import, under any applicable Environmental Law; and (C) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any Governmental Authority; (iii) "Environmental Law" means any federal, state,
-----------------
foreign or local statute, law, rule, regulation, ordinance, code or rule of
common law and any judicial or administrative interpretation thereof binding on
the Company or its operations or property as of the date hereof and Closing
Date, including any judicial or administrative order, consent decree
25
or judgment, relating to the environment, health or Hazardous Materials,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. sec. 9601 et
seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. sec.
6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
sec. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. sec. 2601 et
seq.; the Clean Air Act, 42 U.S.C. sec. 7401 et seq.; Oil Pollution Act of 1990,
33 U.S.C. sec. 2701 et seq.; the Safe Drinking Water Act, 42 U.S.C. sec. 300f et
seq.; and their state and local counterparts and equivalents; (iv)
"Environmental Claims" means any and all administrative, regulatory or judicial
--------------------
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigations or proceedings under any Environmental Law or any
permit issued under any such Environmental Law (for purposes of this subclause
(iv), "Claims"), including, without limitation, (A) any and all Claims by
------
Governmental Authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law and (B)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment; and (v) "Release" means disposing,
-------
discharging, injecting, spilling, leaking, leaching, dumping, emitting,
escaping, emptying or seeping into or upon any land or water or air, or
otherwise entering into the environment.
SECTION 5.17. State Takeover Statutes. The Board of Directors of the
------------- -----------------------
Company has approved the Offer, the Merger and this Agreement and such approval
is sufficient to render inapplicable to the Offer, the Merger, this Agreement
and the other transactions contemplated hereby the provisions of Section
13.1-725.1 et seq. of the VSCA. The Company has taken all actions necessary to
cause 13.1-728.1 et seq. to be inapplicable to the Company. Except for Section
13.1-725.1 et seq. and Sections 13.1-728.1 et seq. of the VSCA (which have been
rendered inapplicable), to the Company's knowledge, no other takeover statute or
similar statute or regulation of any state is applicable to the Offer, the
Merger, this Agreement and the other transactions contemplated hereby.
SECTION 5.18. Voting Requirements; Board Approval; Appraisal Rights
------------- -----------------------------------------------------
(a) The affirmative vote of the holders of more than two-thirds of the
outstanding shares of the Company Common Stock (voting as one class, with each
share of the Company Common Stock having one vote) entitled to be cast approving
this Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement, and the
transactions contemplated hereby.
(b) The Board of Directors of the Company has, as of the date of this
Agreement, (i) determined that the Offer and the Merger are in the best
interests of the Company and its shareholders, (ii) approved this Agreement and
the transactions contemplated hereby and (iii) resolved to recommend that the
shareholders of the Company accept the Offer and approve this Agreement.
(c) No holder of Company Common Stock will have appraisal rights under
Section 13.1-730 of the VSCA as a result of, or in connection with, the Offer or
the Merger.
26
SECTION 5.19. Opinion of Financial Advisor. The Company has received the
------------- ----------------------------
opinion of Xxxxxx Xxxxxxx that, as of the date of this Agreement, the
consideration to be received by the holders of the Company Common Stock pursuant
to the terms of the Offer and the Merger is fair from a financial point of view
to such holders, and a copy of such opinion has been, or promptly upon receipt
thereof will be, delivered to Parent; it being understood and acknowledged by
Parent that such opinion has been rendered for the benefit of the Board of
Directors of the Company, and is not intended to, and may not, be relied upon by
Parent, its Affiliates or their respective shareholders.
SECTION 5.20. Rights Agreement The copy of the Rights Agreement, dated as
------------- ----------------
of February 26,1999, between the Company and Norwest Bank Minnesota, N.A., as
Rights Agent (the "Rights Agreement"), including all amendments and exhibits
----------------
thereto, that is set forth as an exhibit to the Company's Form 8-A, dated as of
February 26, 1999, is a complete and correct copy thereof. The Company has taken
all necessary action to amend the Rights Agreement, a copy of which amendment
will be promptly provided to Parent, so that neither the execution of this
Agreement nor the consummation of the Merger will (a) cause the Rights issued
pursuant to the Rights Agreement to become exercisable, (b) cause Parent or
Merger Sub to become an Acquiring Person (as such term is defined in the Rights
Agreement) or (c) give rise to a Distribution Date (as such term is defined in
the Rights Agreement).
SECTION 5.21. Non-competition Agreements Except as set forth in Section
------------- --------------------------
5.21 of the Company Disclosure Schedule, neither the Company nor any Subsidiary
of the Company is a party to any contract or agreement that has or will have a
material adverse effect upon the ability of (a) the Company or the Surviving
Company to, in all respects, conduct its business and operations as currently
conducted or (b) Parent to, in all respects, conduct its business and operations
as currently conducted.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as disclosed in Parent's disclosure schedule delivered
concurrently with the delivery of this Agreement (the "Parent Disclosure
-----------------
Schedule"), Parent hereby represents and warrants to the Company as follows:
--------
SECTION 6.01. Due Organization, Good Standing and Corporate Power. Parent
------------- ---------------------------------------------------
and each of its Subsidiaries is a corporation or legal entity duly organized,
validly existing and in good standing (with respect to jurisdictions which
recognize the concept of good standing) under the laws of the jurisdiction of
its incorporation and each such Person has all requisite corporate, partnership
or similar power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
could not reasonably be expected to, individually or in the aggregate, have a
Parent Material Adverse Effect. Parent and each of its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business
27
conducted by it makes such qualification necessary, except where
the failure to be so qualified or licensed and in good standing would not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect. Other than as set forth in Section 6.01 of the Parent
Disclosure Schedule, the respective Articles of Incorporation and By-Laws or
other organizational documents of the Subsidiaries of Parent do not contain any
provision limiting or otherwise restricting the ability of Parent to control
such Subsidiaries. As soon as practicable after the date hereof Parent will
provide the Company with a list of all Subsidiaries of Parent and their
respective jurisdictions of incorporation or organization which identifies
Parent's (direct or indirect) percentage of equity ownership therein. The copies
of Parent's Articles of Incorporation and By-Laws that are set forth as exhibits
to Parent's Form 10-K for the year ended January 1, 2000 are complete and
correct copies thereof. Such Articles of Incorporation and By-Laws are in full
force and effect on the date hereof, and have not been amended, modified or
rescinded.
SECTION 6.02. Authorization and Validity of Agreement. Parent and, upon
------------- ---------------------------------------
execution of the Agreement, Merger Sub will, have all necessary corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Parent and, upon execution of the
Agreement, Merger Sub, and the consummation by each such party of the
transactions contemplated hereby, have been or upon execution by Merger Sub,
will be, duly authorized and unanimously approved by the Board of Directors of
Parent and Merger Sub and no other corporate action on the part of either of
Parent or Merger Sub is or will be necessary to authorize the execution,
delivery and performance of this Agreement by each of Parent and Merger Sub and
the consummation of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Parent and (in the case of Merger Sub, will
be), and is a valid and binding obligation of each of Parent and Merger Sub (or,
in the case of Merger Sub, will be) enforceable against Parent and Merger Sub in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
SECTION 6.03. Capitalization. (a) The authorized capital stock of Parent
------------- --------------
consists of 650,000,000 shares of common stock, 400,000,000 of which are Parent
Common Stock and 250,000,000 of which have been designated Georgia-Pacific
Corporation-Timber Group Common Stock ("Timber Stock"), par value $.80 per
------------
share, and 35,000,000 shares of preferred stock, 25,000,000 of which have been
designated Junior Preferred Stock (the "Junior Preferred Stock"), no par value
----------------------
per share, and 10,000,000 have been designated Preferred Stock, no par value per
share (the "Preferred Stock"). At the close of business on July 11, 2000: (i)
---------------
170,563,964 and 79,615,682 shares of Parent Common Stock and Timber Stock,
respectively, were issued and outstanding, (ii) 25,200,000 and 8,400,000 shares
of Parent Common Stock and Timber Stock, respectively, were reserved for
issuance under Parent's stock option and stock benefit plans and arrangements,
(iii) no shares of Junior Preferred Stock or shares of Preferred Stock were
issued and outstanding and (iv) 21,501,300 and 14,387,850 shares of Parent
Common Stock and Timber Stock, respectively, were held by Parent in its
treasury. All issued and outstanding shares of capital stock of Parent are, and
all shares of Parent Common Stock to be issued hereunder will be, upon issuance,
duly authorized, validly issued, fully paid and nonassessable. Except as set
forth above or in Section 6.03(a) of the Parent Disclosure Schedule or as
required by local law and other that the Parent Rights, (i) Parent is not bound
by, obligated
28
under, or party to an Issuance Obligation with respect to any security of
Parent or any Significant Subsidiary of Parent and (ii) there is no outstanding
Voting Debt of Parent. Except as set forth in Section 6.03(a) of the Parent
Disclosure Schedule, there are no outstanding obligations of Parent or any of
its Significant Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding securities of Parent. Except as set forth in Section 6.03(a) of the
Parent Disclosure Schedule, there are no restrictions of any kind which prevent
or restrict the payment of dividends by Parent or any of its Significant
Subsidiaries and there are no limitations or restrictions on the right to vote,
sell or otherwise dispose of the capital stock of Parent or other ownership
interests.
(b) The authorized capital stock of Merger Sub will consist of 1,000
shares of common stock, par value $.01 per share, all of which are validly
issued and outstanding, fully paid and nonassessable and are owned by Parent
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, charges or other encumbrances of any nature
or any other limitation or restriction (including any restriction on the right
to vote or sell the same, except as may be provided under applicable Federal or
state securities laws) (collectively, "Liens").
-----
(c) All of the issued and outstanding shares of capital stock of each
Subsidiary are validly existing, fully paid and non-assessable. Except as set
forth in the Parent SEC Reports filed on or before the date hereof or in Section
6.03(c) of the Parent Disclosure Schedule, no Significant Subsidiary of Parent
has outstanding Voting Debt and there are no obligations of Parent or any of its
Significant Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding securities of any of its Significant Subsidiaries or any capital
stock of, or other ownership interests in, any of its Significant Subsidiaries.
(d) Except for Parent's interest in its Subsidiaries, and as set forth
in Section 6.03(d) of the Parent Disclosure Schedule, Parent does not directly
or indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture, limited liability company or other
business association or entity which is material to Parent and its Subsidiaries,
taken as a whole.
SECTION 6.04. Consents and Approvals; No Violations. Assuming (i) the
------------- -------------------------------------
filings required under the HSR Act are made and the waiting periods thereunder
have been terminated or expired, (ii) the prior notification and reporting
requirements of the European Antitrust Laws, if applicable, are satisfied and
any antitrust filings/notifications which must or may be effected at the
national level in countries having jurisdiction are made and any applicable
waiting periods thereunder have been terminated or expired, (iii) the prior
notification and reporting requirements of other antitrust or competition laws
as may be applicable are satisfied and any antitrust filings/notifications which
must be or may be effected in countries having jurisdiction are made, (iv) the
applicable requirements of the Securities Act and the Exchange Act are met, (v)
the requirements under any applicable foreign or state securities or blue sky
laws are met, (vi) the requirements of the NYSE in respect of the listing of the
shares of Parent Common Stock to be issued hereunder are met, (vii) the filing
of the Articles of Merger and other appropriate merger documents, if any, as
required by the VSCA, are made, (viii) the requirements of any applicable state
law relating to the transfer of contaminated property are met and (ix) as
otherwise set forth in Section 6.04 of the Parent Disclosure Schedule, the
execution
29
and delivery of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby donot and will
not: (A) violate or conflict with any provision of Parent's Articles of
Incorporation or Parent's By-Laws or the comparable governing documents of
any of its Significant Subsidiaries; (B) violate or conflict with any Laws or
Orders of any Governmental Authority applicable to Parent or any of its
Subsidiaries or by which any of their respective properties or assets may be
bound; (C) except as provided above or as set forth in Section 6.04 of the
Parent Disclosure Schedule, require any filing with, or permit, consent or
approval of, or the giving of any notice to, any Governmental Authority; or (D)
except as set forth in Section 6.04 of the Parent Disclosure Schedule, result in
a violation or breach of, conflict with, constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Lien upon any of the properties or assets of Parent or any of its Subsidiaries
under, or give rise to any obligation, right of termination, cancellation,
acceleration or increase of any obligation or a loss of a material benefit
under, any of the terms, conditions or provisions of any Contracts to which
Parent or any of its Subsidiaries is a party, or by which any such Person or any
of its properties or assets are bound, excluding from the foregoing clauses (B),
(C) and (D) conflicts, violations, breaches, defaults, rights of payment and
reimbursement, terminations, modifications, accelerations and creations and
impositions of Liens which, and filings, permits, consents, approvals or
notices, the failure to have made or received, would not reasonably be expected
to, individually or in the aggregate, have a Parent Material Adverse Effect;
provided, however, that for purposes of this Section 6.04, the definition of
-------- -------
"Parent Material Adverse Effect" shall be read so as not to include clause
(ii)(B) thereof.
SECTION 6.05. Parent Reports and Financial Statements. (a) Since December
------------- ---------------------------------------
31, 1997, Parent and, to the extent applicable, its Subsidiaries have filed all
forms, reports and documents with the SEC required to be filed by it pursuant to
the federal securities laws and the SEC rules and regulations thereunder, and
all forms, reports, schedules, registration statements and other documents filed
with the SEC by Parent and, to the extent applicable, its Subsidiaries have
complied in all material respects with all applicable requirements of the
federal securities laws and the SEC rules and regulations promulgated
thereunder, each as in effect on the date such forms, reports and documents were
filed. Parent has, prior to the date of this Agreement, made available to the
Company true and complete copies of all forms, reports, registration statements
and other filings filed by Parent and its Significant Subsidiaries with the SEC
since December 31, 1997 (such forms, reports, registration statements and other
filings, together with any exhibits, any amendments thereto and information
incorporated by reference therein, are sometimes collectively referred to as the
"Parent SEC Reports"). As of their respective dates, the Parent SEC Reports did
------------------
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and the unaudited consolidated interim
financial statements of Parent included in the Parent SEC Reports were prepared
in accordance with GAAP applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and present fairly, in
all material respects, the consolidated financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and their consolidated results
of operations and changes in financial position for the periods then ended
subject, in the case of the unaudited interim financial statements, to normal
and recurring year-end adjustments. Parent has heretofore provided to the
Company with true and correct copies of any material amendments
30
and/or modifications to any Parent SEC Reports which have not yet been filed
with the SEC but that are required to be filed with the SEC in accordance with
applicable federal securities laws and the SEC rules.
(b) Except as set forth or provided in the Parent SEC Reports filed
prior to the date of this Agreement or in Section 6.05(b) of the Parent
Disclosure Schedule, neither Parent nor any of its Subsidiaries has any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise), in each case that is required by GAAP to be set forth on a
consolidated balance sheet of Parent, except for (i) liabilities or obligations
disclosed or provided for in the Parent SEC Reports filed prior to the date of
this Agreement; (ii) liabilities or obligations under this Agreement or incurred
in connection with the transactions contemplated hereby; and (iii) liabilities
or obligations which would not reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect. Except as set forth in Section
6.05(b) of the Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries is in default in respect of the material terms and conditions of
any indebtedness or other agreement which would reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect.
SECTION 6.06. Information to Be Supplied. (a) Each of the Registration
------------- --------------------------
Statement on Form S-4 to be filed with the SEC by Parent in connection with the
issuance of Parent Common Stock in the Merger, as amended or supplemented from
time to time (as so amended and supplemented, the "Merger Registration
-------------------
Statement"), the Offer Documents and the other documents required to be filed by
---------
Parent with the SEC in connection with the Offer, the Merger and the other
transactions contemplated hereby will comply as to form, in all material
respects, with the requirements of the Exchange Act and the Securities Act, as
the case may be, and will not, on the date of its filing or at the time they
become effective under the Securities Act or, in the case of the Offer
Registration Statement, on the dates the Offer Registration Statement is mailed
to shareholders of the Company and on the Acceptance Date and, in the case of
the Merger Registration Statement, on the dates the Proxy Statement/Prospectus
is mailed to shareholders of the Company and at the time of the Company
Shareholder Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 6.06, no
representation or warranty is made by Parent with respect to statements made or
incorporated by reference in the Merger Registration Statement or the Offer
Documents based on information supplied by the Company expressly for inclusion
or incorporation by reference therein or based on information which is not made
in or incorporated by reference in such documents but which should have been
disclosed pursuant to Section 5.06.
SECTION 6.07. Absence of Certain Events. Except as disclosed in the
------------- -------------------------
Parent SEC Reports filed on or before the date hereof or in Section 6.07 of the
Parent Disclosure Schedule or as required or expressly permitted by this
Agreement, since January 1, 2000, Parent and its Subsidiaries have operated
their respective businesses only in the ordinary course and there has not
occurred (i) any event, occurrence, change or developments which would
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse
31
Effect or (ii) any damage, destruction or loss which, individually or in the
aggregate, resulted in or would reasonably be expected to result in, a
Parent Material Adverse Effect.
SECTION 6.08. Litigation. Except as disclosed in Section 6.08 of Parent
------------- ----------
Disclosure Schedule or in the Parent SEC Reports filed prior to the date hereof,
there are no Proceedings pending against Parent or its Subsidiaries or, to the
knowledge of Parent, threatened against Parent or its Subsidiaries (or any of
their respective properties, rights or franchises), at law or in equity, or
before or by any federal or state commission, board, bureau, agency, regulatory
or administrative instrumentality or other Governmental Authority or any
arbitrator or arbitration tribunal, that would reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect, and, to
the knowledge of Parent, no development has occurred with respect to any pending
or threatened Proceeding that would reasonably be expected to result in a Parent
Material Adverse Effect or would reasonably be expected to prevent, materially
impair or materially delay the consummation of the transactions contemplated
hereby. Except as disclosed in the Parent SEC Reports filed prior to the date
hereof, neither Parent nor any of its Subsidiaries is subject to any Order
entered in any proceeding which would reasonably be expected to, individually or
in the aggregate, have a Parent Material Adverse Effect. The foregoing does not
apply to any Proceeding or Order arising in connection with or as a result of
the execution of this Agreement or the commencement of the Offer or the
consummation of the other transactions contemplated hereby.
SECTION 6.09. Compliance with Laws. Except as disclosed in Section 6.09
------------- --------------------
of the Parent Disclosure Schedule: (a) Parent and its Subsidiaries are in
compliance with all applicable federal, state, local and foreign statutes, laws,
regulations, orders, judgments and decrees except where the failure to so comply
could not reasonably be expected to, individually or in the aggregate, have a
Parent Material Adverse Effect and (b) Parent and its Subsidiaries hold, to the
extent legally required, all Permits that are required for the operation of the
respective businesses of Parent and/or its Subsidiaries as now conducted, except
where the failure to hold any such Permit could not reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect, and
there has not occurred any default under any such Permit, except to the extent
that such default could not reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect.
SECTION 6.10. Parent Employee Benefit Plans. (a) Except as set forth in
------------- -----------------------------
Section 6.10(a) of the Parent Disclosure Schedule, (i) each employee benefit
plan subject to or governed by the laws of any jurisdiction outside of the
United States or any State or Commonwealth of the United States, (ii) each
employee benefit plan, within the meaning of Section 3(3) of ERISA, whether or
not subject to ERISA, and (iii) each foreign or domestic stock option, stock
appreciation right, restricted stock, stock purchase, stock unit, performance
share, incentive, bonus, profit-sharing, savings, deferred compensation, health,
medical, dental, life insurance, disability, accident, supplemental unemployment
or retirement, employment, severance, termination or salary or benefits
continuation or fringe benefit plan, program, arrangement, contract or agreement
maintained by Parent or any Affiliate thereof (including, for this purpose and
for the purpose of all of the representations in this Section 6.10, all
employers (whether or not incorporated) that would be treated together with
Parent and/or any such Affiliate as a single employer within the meaning of
Section 414 of the Code) or to which Parent or any Affiliate thereof contributes
(or has any obligation to contribute), has any liability or is a
32
party (collectively, the "Parent Employee Benefit Plans") is in compliance with
-----------------------------
all applicable foreign and domestic laws (including, without limitation, ERISA
and the Code) and has been administered and operated in accordance with its
terms, in each case except as would not, in the aggregate, have a Parent
Material Adverse Effect.
(b) Set forth in Section 6.10(b) of the Parent Disclosure Schedule is an
accurate and complete list of (i) each material Parent Employee Benefit Plan and
(ii) any material claim, action, litigation, audit, examination, investigation
or administrative proceeding that has been made or commenced or, to the best
knowledge of the Parent, threatened with respect to any material Parent Employee
Benefit Plan (other than routine claims for benefits in the ordinary course).
(c) Parent has made available or will make available to the Company or
its counsel true and complete copies of each plan document related to each
material Parent Employee Benefit Plan and any related trust agreement or funding
vehicle, together with all amendments thereto, and such other documentation with
respect to any material Parent Employee Benefit Plan as reasonably requested by
Company.
SECTION 6.11. Broker's or Finder's Fee.
------------- -------------------------
Except for Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and Banc of
America Securities LLC (whose fees and expenses will be paid by Parent in
accordance with their agreements with such firms), no broker, finder or
investment banker is entitled to any brokerage, finders or other fee or
commission or expense reimbursement from Parent or from any of its Subsidiaries
or any of its controlled Affiliates in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
Parent, any of its Subsidiaries or any of its Affiliates.
SECTION 6.12. Ownership of Capital Stock. Except as set forth in Section
------------- --------------------------
6.12 of the Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries beneficially owns, directly or indirectly, any capital stock of the
Company or is a party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any capital stock of the
Company, other than as contemplated by this Agreement.
SECTION 6.13. Vote Required. Subject to Section 6.13 of the Parent
---------------------------
Disclosure Schedule, no vote of the holders of any class or series of capital
stock of Parent is necessary to approve any of the transactions contemplated
hereby.
SECTION 6.14. Financing. Parent has, or will have prior to the expiration
------------- ---------
of the Offer and the Merger, sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to purchase all of the
shares of Company Common Stock outstanding on a fully-diluted basis and to pay
all related fees and expenses in connection therewith. Parent has provided the
Company true and complete copies of all commitment letters that Parent and
Merger Sub have received with respect to their financing of the Offer, the
Merger and the other transactions contemplated hereby.
33
ARTICLE VII
TRANSACTIONS PRIOR TO CLOSING DATE
SECTION 7.01. Access to Information Concerning Properties and Records.
------------- ---------------------------------------------------------
Except as otherwise prohibited by applicable Law, during the period commencing
on the date hereof and ending on the earlier of (a) the Closing Date and (b) the
date on which this Agreement is terminated pursuant to Section 9.01 hereof, each
of the Company and Parent shall, and each shall cause each of its Subsidiaries
to, upon reasonable notice, afford the other party, and its respective counsel,
accountants, consultants and other authorized representatives, reasonable access
during normal business hours to its and its Subsidiaries' employees, properties,
books and records in order that they may have the opportunity to make such
investigations as they shall reasonably require; provided, however, that such
--------- -------
investigation shall not affect the representations and warranties made by the
Company or Parent in this Agreement. Except as otherwise prohibited by
applicable law, the Company shall furnish promptly to Parent and Parent shall,
and shall cause Merger Sub to, furnish promptly to the Company (x) a copy of
each material form, report, schedule, statement, registration statement and
other document filed by it or its Significant Subsidiaries during such period
pursuant to the requirements of Federal, state or foreign securities laws and
(y) all other information concerning its or its Subsidiaries' business,
properties and personnel as Parent or the Company may reasonably request. Except
as otherwise prohibited by applicable law, each of the Company and Parent agrees
to cause its officers and employees to furnish such additional financial and
operating data and other information and respond to such inquiries as the other
party shall from time to time reasonably request.
SECTION 7.02. Confidentiality. Prior to the Effective Time and after any
------------- ---------------
termination of this Agreement, each of Parent and the Company will comply with
all of their respective obligations under the confidentiality Agreement, dated
May 12, 2000 (the "Confidentiality Agreement") among Parent and the Company
-------------------------
respect to the information disclosed pursuant to Section 7.01 hereof or
otherwise.
SECTION 7.03. Conduct of the Business of the Company Pending the Closing
------------- -----------------------------------------------------------
Date. The Company agrees that, except as permitted, required or specifically
----
contemplated by, or otherwise described in, this Agreement or otherwise
consented to or approved in writing by Parent (which consent or approval shall
not be unreasonably withheld or delayed) during the period commencing on the
date hereof until the Effective Time:
(a) The Company and each of its Subsidiaries shall conduct their
respective operations in all material respects only according to their
ordinary and usual course of business consistent with past practice and
shall use their reasonable best efforts to preserve intact their respective
business organization, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients, joint venture partners and others having
significant business relationships with them; and
34
(b) Except as set forth in Section 7.03(b) of the Company Disclosure
Schedule or as expressly contemplated by this Agreement, neither the
Company nor any of its Subsidiaries shall:
(i) make any change in or amendment to its Articles of
Incorporation or its By-Laws or other organizational
documents;
(ii) issue or sell, or authorize to issue or sell, any shares of
its capital stock or any other securities, or issue or sell, or
authorize to issue or sell, any securities convertible into, or
options, warrants or rights to purchase or subscribe for, or enter
into any arrangement or contract with respect to the issuance or
sale of, any shares of its capital stock or any other securities, or
make any other changes in its capital structure, other than (A) the
issuance of Company Common Stock upon the exercise of Company
Options outstanding on the date hereof, (B) issuances by a wholly
owned Subsidiary of the Company of capital stock to such
Subsidiary's parent, the Company or another wholly owned Subsidiary
of the Company, (C) issuances of Company Common Stock upon the
conversion of convertible securities of the Company outstanding as
of the date of this Agreement, (D) issuances or sales of Company
Common Stock pursuant to participant-directed transactions or the
matching of contributions by the Company made in accordance with the
terms and conditions of the Company 401(k) Plan or (E)
participant-directed transactions under the Company's Canadian stock
purchase plan in accordance with terms and conditions of such plan;
(iii) declare, pay or set aside any dividend or other
distribution or payment with respect to, or split, combine, redeem
or reclassify, or purchase or otherwise acquire, any shares of its
capital stock or its other securities, other than (A) dividends
payable by a Subsidiary of the Company to the Company or another
Subsidiary of the Company or (B) the payment of regular quarterly
dividends not to exceed $0.15 per share of Company Common Stock
during the quarter ended September 30, 2000 and December 31, 2000;
(iv) other than in connection with transactions permitted by
Section 7.03(b)(v), incur any capital expenditures or any
obligations or liabilities in respect thereof, except for those (A)
contemplated by the capital expenditure budgets for the Company and
its Subsidiaries made available to Parent, (B) incurred in the
ordinary course of business of the Company and its Subsidiaries or
(C) not otherwise described in clauses (A) and (B) which, in the
aggregate, do not exceed $25 million;
(v) other than acquisitions by the Company or a wholly owned
Subsidiary of the Company of the assets of, or equity interests in,
a wholly owned Subsidiary of the Company, acquire (whether pursuant
to merger, stock or asset purchase or otherwise) in one transaction
or series of related transactions (A) any assets (including any
equity interests) having a fair market value in excess of $25
million, or (B) all or substantially all of the equity interests of
any Person or any
35
business or division of any Person in the aggregate having a fair
market value in excess of $25 million;
(vi) except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on
the date of this Agreement or by applicable law, or as contemplated
by this Agreement or permitted by Section 7.03(b)(ii) hereof,
increase the compensation or fringe benefits of any of its directors
or officers or of employees (except for normal increases in the
ordinary course of business consistent with past practice for
non-director and non-officer employees) or enter into any severance,
termination or change of control or similar arrangements not
currently in effect or make any severance payments (except as
required to be paid under existing severance plans, and except in
the ordinary course of business consistent with past practice for
non-director and non-officer employees) or enter into any
employment, consulting or severance agreement or arrangement with
any present or former director, officer or other employee of the
Company or any of its Subsidiaries, or establish, adopt, enter into
or amend in any material respect or terminate any collective
bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, phantom stock, performance shares,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or
arrangement or grant any additional awards under such plans, except
to the extent required by such plans, for the benefit of any
directors, officers or employees;
(vii) transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of, encumber or subject to any Lien, any material
assets, other than in the ordinary course of business;
(viii) except as required by applicable law or GAAP, make any
material change in its method of accounting;
(ix) adopt or enter into a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger or any such transaction
involving the Company and a wholly owned Subsidiary of the Company
or two wholly owned Subsidiaries of the Company) or any agreement
relating to a Takeover Proposal, except as permitted by Sections
7.07 and 9.01(c)(ii);
(x) (A) incur any material indebtedness for borrowed money or
guarantee any such indebtedness of another Person, other than
indebtedness owing to or guarantees of indebtedness owing to the
Company or any direct or indirect wholly owned Subsidiary of the
Company or (B) make any loans or advances to any other Person, other
than to the Company or to any direct or indirect wholly owned
Subsidiary of the Company, except, in the case of clause (A), for
borrowings in the ordinary course of business consistent with past
practice, including without limitation borrowings under existing
credit facilities
36
described in the Company SEC Reports in the ordinary course of
business consistent with past practice for working capital purposes;
(xi) except to the extent required under existing employee and
director benefit plans, agreements or arrangements, applicable Law
or as contemplated by this Agreement or Section 7.16 of the Company
Disclosure Schedule accelerate or otherwise modify the payment,
right to payment, vesting or exercise rights of any bonus,
severance, profit sharing, retirement, deferred compensation, stock
option, insurance or other compensation or benefits;
(xii) pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction (A) of any such claims, liabilities or obligations in
the ordinary course of business and consistent with past practice,
(B) of claims, liabilities or obligations reflected or reserved
against in, or contemplated by, the consolidated financial
statements (or the notes thereto) contained in the Company SEC
Reports or (C) other claims not to exceed $5 million in the
aggregate;
(xiii) enter into any agreement, understanding or commitment that
materially limits or impedes the Company's, any of its Significant
Subsidiaries', the North American Tissue division's or the Xxxxx
division's ability to compete with or conduct any business or line
of business, including, but not limited to, geographic limitations
on the Company's or any of its Significant Subsidiaries', the North
American Tissue division's or the Xxxxx division's activities;
(xiv) plan, announce, implement or effect any material reduction
in labor force, lay-off, early retirement program, severance program
or other program or effort concerning the termination of employment
of employees of the Company or its Subsidiaries; provided, however,
that routine employee terminations for cause or following
performance reviews shall not be considered subject to this clause
(xiv);
(xv) take any action including, without limitation, the adoption
of any shareholder rights plan or amendments to its Articles of
Incorporation or By-Laws (or comparable governing documents), which
would, directly or indirectly, restrict or impair the ability of
Parent to vote, or otherwise to exercise the rights and receive the
benefits of a shareholder with respect to, securities of the Company
acquired or controlled by Parent or Merger Sub;
(xvi) materially modify, amend or terminate any material contract
to which it is a party or waive any of its material rights or claims
except in each case in the ordinary course of business;
(xvii) other than in the ordinary course of business consistent
with past practice, make any tax election or enter into any
settlement or compromise of any
37
tax liability that in either case is material to the business of
the Company and its Subsidiaries as a whole;
(xviii) amend or modify, or propose to amend or modify, the
Rights Agreement, as amended as of the date hereof, except as
contemplated in this Agreement;
(xix) agree, in writing or otherwise, to take any of the
foregoing actions.
SECTION 7.04. Conduct of the Business of Parent Pending the Closing
------------- ------------------------------------------------------
Date. Parent agrees that, except as permitted, required or specifically
----
contemplated by, or otherwise described in, this Agreement or otherwise
consented to or approved in writing by the Company (which consent or approval
shall not be reasonably withheld or delayed), during the period commencing on
the date hereof until the Effective Time:
(a) Except as set forth in Section 7.04 of the Parent Disclosure Schedule,
Parent and each of its Subsidiaries shall conduct their respective operations in
all material respects only according to their ordinary and usual course of
business consistent with past practice and shall use their reasonable best
efforts to preserve intact their respective business organization, keep
available the services of their officers and employees and maintain satisfactory
relationships with licensors, suppliers, distributors, clients, joint venture
partners and others having significant business relationships with them; and
(b) Except as set forth in Section 7.04(b) of the Parent Disclosure
Schedule or as expressly contemplated by this Agreement, neither Parent nor any
of its Subsidiaries shall:
(i) make any change in or amendment to Parent's Articles of
Incorporation that changes any material term or provision of the
Parent Common Stock;
(ii) make any material change in or amendment to Merger Sub's
Articles of Incorporation or Bylaws in any manner adverse to the
Company or its shareholders;
(iii) engage in any repurchase at a premium, recapitalization,
restructuring or reorganization with respect to Parent's capital
stock, including, without limitation, by way of any extraordinary
dividend on, or other extraordinary distributions with respect to,
Parent's capital stock;
(iv) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of or equity in, or by any other
manner, any Person or any business or division thereof, or otherwise
acquire any assets, unless such acquisition or the entering into of
a definitive agreement relating to or the consummation of such
transaction would not (A) impose any delay in the obtaining of, or
increase the risk of not obtaining, any authorizations, consents,
orders, declarations or approvals of any Antitrust Authority
necessary to consummate the Offer or the Merger or the expiration or
termination of any applicable waiting period, (B) increase the risk
of any Governmental Authority
38
entering an order prohibiting the consummation of the Offer or
the Merger or (C) increase the risk of not being able to remove any
such order on appeal or otherwise;
(v) subject to Section 7.09, take or omit to take any action
which would have the consequences set forth in clauses (A) through
(C) of clause (iv) above;
(vi) not take any action which would cause the Parent Common
Stock to cease to be listed on the NYSE; or
(vii) agree, resolve or otherwise commit to do any of the
foregoing.
SECTION 7.05. Company Shareholder Meeting; Preparation of Proxy
------------- -------------------------------------------------
Statement/Prospectus. (a) Company Shareholder Meeting. If required by applicable
-------------------- ---------------------------
law, the Company, acting through its Board of Directors, shall, in accordance
with applicable law, duly call, convene and hold a special meeting of the
holders of the Company Common Stock (the "Company Shareholder Meeting") as soon
---------------------------
as reasonably practicable after the acceptance for payment of shares of Company
Common Stock pursuant to the Offer for the purpose of voting upon this Agreement
and the Merger and the Company agrees that this Agreement shall be submitted at
such meeting. The Company shall take all action necessary to secure the vote of
shareholders required by applicable law and the Company's Article of
Incorporation or By-Laws to obtain the approval for this Agreement. Unless the
Board of Directors of the Company otherwise determines (based upon a majority
vote of the Board of Directors in its good faith judgment that such other action
is necessary to comply with its fiduciary duty to shareholders under applicable
law after receiving advice from outside legal counsel) prior to the approval by
the shareholders of the Company, (i) the Company's Board of Directors shall
recommend approval by its shareholders of this Agreement (the "Company
-------
Recommendation"), (ii) neither the Company's Board of Directors nor any
--------------
committee thereof shall amend, modify, withdraw, condition or qualify the
Company Recommendation in a manner adverse to Parent or take any action or make
any statement inconsistent with the Company Recommendation and (iii) the Company
shall take all lawful action to secure the Company Shareholder Approval.
(b) Preparation of Merger Registration Statement and Proxy
----------------------------------------------------------
Statement/Prospectus. If required by applicable law, promptly after the
--------------------
acceptance for payment of shares of Company Common Stock pursuant to the Offer,
Parent and the Company shall prepare, and Parent shall file with the SEC, the
Merger Registration Statement, in which the Proxy Statement/Prospectus will be
included as Parent's prospectus. Each of the Company and Parent shall use all
reasonable efforts to have the Merger Registration Statement declared effective
under the Securities Act as promptly as practicable after the acceptance for
payment of shares of Company Common Stock pursuant to the Offer and to keep the
Merger Registration Statement effective as long as is necessary to consummate
the Merger. The Company shall mail the Proxy Statement/Prospectus to its
shareholders as promptly as practicable after the Merger Registration Statement
is declared effective under the Securities Act and, if necessary, after the
Proxy Statement/Prospectus shall have been so mailed, promptly circulate
amended, supplemental or supplemented proxy material, and, if required in
connection therewith, resolicit proxies. Parent shall take any action required
to be taken under any applicable state securities or
39
blue sky laws in connection with the issuance of Parent Common Stockin the
Merger. No amendment or supplement to the Proxy Statement/Prospectus will
be made by the Company or Parent without the approval of the other party, which
will not be unreasonably withheld or delayed. Each party will advise the other
party, promptly after it receives notice thereof, of the time when the Merger
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of Parent Common Stock issuable in connection with the Merger for offering or
sale in any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement/ Prospectus or comments thereon and responses thereto or requests by
the SEC for additional information. If at any time prior to the Effective Time,
the Company or Parent discovers any information relating to either party, or any
of their respective Affiliates, officers or directors, that should be set forth
in an amendment or supplement to the Proxy Statement/Prospectus, so that such
document would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party that
discovers such information shall promptly notify the other party and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law or regulation,
disseminated to the shareholders of the Company.
(c) Short-Form Merger. Notwithstanding the foregoing, if Parent or
-----------------
Merger Sub shall acquire at least 90% of the outstanding shares of Company
Common Stock pursuant to the Offer or otherwise, the parties hereto agree,
subject to the satisfaction or (to the extent permitted hereunder) waiver of all
conditions to the Merger, to take, or cause to be taken, all necessary and
appropriate action to cause the Merger to be effective as soon as practicable
after the acceptance for payment and purchase of shares of Company Common Stock
pursuant to the Offer without the Company Shareholder Meeting.
SECTION 7.06. Reasonable Best Efforts. Subject to Section 7.09 and the
------------- -----------------------
terms and conditions provided herein, each of the Company and Parent shall, and
shall cause each of its Subsidiaries to, cooperate and use their reasonable best
efforts to take, or cause to be taken, all appropriate action, and to make, or
cause to be made, all filings necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement including, without limitation, the Company's and
Parent's reasonable best efforts to obtain, prior to the Acceptance Date, all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Authorities (other than with respect to any licenses,
permits, consents, approvals, authorizations, qualifications and orders of any
Antitrust Authority which the Company and Parent shall use their best efforts to
obtain) and parties to contracts with the Company or Parent, as the case may be,
and their respective Subsidiaries as are necessary for consummation of the
transactions contemplated by this Agreement and in order to comply with
applicable Laws; provided, however, that except as otherwise contemplated by
-------- -------
this Agreement, no material loan agreement or contract for borrowed money shall
be repaid except as currently required by its terms, in whole or in part, and no
contract shall be amended to materially increase the amount payable thereunder
or otherwise to be more burdensome to the Company or any of its Subsidiaries in
order to obtain any such consent, approval or authorization without first
obtaining the written approval of Parent.
40
SECTION 7.07. No Solicitation. (a) The Company shall, and shall use
------------- ---------------
its reasonable best efforts to cause its Subsidiaries, and its and their,
officers, directors, employees, financial advisors, attorneys and other
advisors, representatives and agents (collectively, "Representatives") to,
---------------
immediately cease any discussions or negotiations with third parties with
respect to any Takeover Proposal. The Company shall not, nor shall it authorize
or permit any of its Representatives, to (i) directly or indirectly solicit,
facilitate, initiate or encourage the making or submission of, any Takeover
Proposal, (ii) enter into any agreement, arrangement or understanding with
respect to any Takeover Proposal or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transaction contemplated by this Agreement, (iii) initiate
or participate in any way in any discussions or negotiations regarding, or
furnish or disclose to any Person (other than a party to this Agreement) any
information with respect to, or take any other action to facilitate or in
furtherance of any inquiries or the making of any proposal that constitutes, or
could reasonably be expected to lead to, any Takeover Proposal or (iv) grant any
waiver or release under any standstill or similar agreement with respect to any
class of the Company's equity securities; provided that prior to the Acceptance
--------
Date, in response to an unsolicited Takeover Proposal that did not result from
the breach of this Section 7.07 and following delivery to Parent of notice of
the Takeover Proposal in compliance with its obligations under Section 7.07(d)
hereof, the Company may participate in discussions or negotiations with or
furnish information (pursuant to a confidentiality agreement with customary
terms) to any third party which makes a bona fide written Takeover Proposal if
(A) a majority of the Company's Board of Directors reasonably determines in good
faith (after consultation with its financial advisors) that taking such action
would be reasonably likely to lead to the delivery to the Company of a Superior
Proposal and (B) a majority of the Company's Board of Directors determines in
good faith (after receiving the advice of outside legal counsel) that it is
necessary to take such actions(s) in order to comply with its fiduciary duties
under applicable law.
For purposes of this Agreement, "Takeover Proposal" means any
-----------------
inquiry, proposal or offer from any Person or group relating to (i) any direct
or indirect acquisition or purchase of 20% or more of the assets of the Company
or any of its Subsidiaries or 20% or more of any class of equity securities of
the Company or any of its Subsidiaries, (ii) any tender offer or exchange offer
that, if consummated, would result in any Person beneficially owning all or any
portion of any class of equity securities of the Company or any of its
Subsidiaries or (iii) any merger, consolidation, business combination, sale of
all or any substantial portion of the assets, recapitalization, liquidation or a
dissolution of, or similar transaction involving the Company or any of its
Subsidiaries other than the Offer or the Merger; and "Superior Proposal" means a
-----------------
bona fide written Takeover Proposal made by a third party to purchase at least
two-thirds of the outstanding equity securities of the Company pursuant to a
tender offer or exchange offer or to effect any merger, consolidation, business
combination or sale of all or substantially all of the assets, recapitalization
or similar transaction involving the Company (i) on terms which a majority of
the Company's Board of Directors determines in good faith (after consultation
with its financial advisors) to be superior to the Company and its shareholders
(in their capacity as shareholders) from a financial point of view (taking into
account, among other things, all legal, financial, regulatory and other aspects
of the proposal and identity of the offeror) as compared to the transactions
contemplated hereby and any alternative proposed by Parent or Merger Sub in
accordance with Section 9.01(c)(ii) and (ii) which is reasonably capable of
being consummated.
41
(b) The Company agrees that, except as set forth in Section 7.07(c),
neither its Board of Directors nor any committee thereof shall (i) approve or
recommend, or propose to approve or recommend, any Takeover Proposal or (ii)
approve, recommend or cause it to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Takeover Proposal.
----------------------
(c) The Company and Parent agree that, notwithstanding anything to the
contrary herein, prior to the Acceptance Date, the Company and/or its Board of
Directors may take the actions otherwise prohibited by Section 7.07(b) if (i) a
third party makes a Superior Proposal, (ii) the Company complies with its
obligations under Section 7.07(d), (iii) all of the conditions to the Company's
right to terminate this Agreement in accordance with Section 9.01(c)(ii) hereof
have been satisfied (including the expiration of the six Business Day period
described therein and the payment of all amounts required pursuant to Section
9.03 hereof) and (iv) simultaneously therewith, this Agreement is terminated in
accordance with Section 9.01(c)(ii) hereof.
(d) The Company agrees that in addition to the obligations of the
Company set forth in paragraphs (a), (b) and (c) of this Section 7.07, promptly
on the date of receipt thereof, the Company shall advise Parent in writing of
any request for information or any Takeover Proposal, or any inquiry,
discussions or negotiations with respect to any Takeover Proposal and the terms
and conditions of such request, Takeover Proposal, inquiry, discussions or
negotiations and the Company shall promptly provide to Parent copies of any
written materials received by the Company in connection with any of the
foregoing, and the identity of the Person or group making any such request,
Takeover Proposal or inquiry or with whom any discussions or negotiations are
taking place. The Company agrees that it shall keep Parent fully informed of the
status and details (including amendments or proposed amendments) of any such
request, Takeover Proposal or inquiry and keep Parent fully informed as to the
material details of any information requested of or provided by the Company and
as to the details of all discussions or negotiations with respect to any such
request, Takeover Proposal or inquiry. The Company agrees that it shall
simultaneously provide to Parent any non-public information concerning the
Company provided to any other Person or group in connection with any Takeover
Proposal which was not previously provided to Parent.
(e) Parent agrees that nothing contained in this Section 7.07 shall
prohibit the Company from taking and disclosing to its shareholders a position
contemplated by Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act
with respect to any tender offer.
(f) The Company agrees that immediately following the execution of
this Agreement, (i) it shall request each Person which has heretofore executed a
confidentiality agreement in connection with such Person's consideration of
acquiring the Company to return or destroy (which destruction shall be certified
in writing by an executive officer of the Company) all confidential information
heretofore furnished to such Person by or on its behalf and (ii) the Company
shall cease and cause to be terminated immediately all existing discussions or
negotiations with any Person conducted heretofore with respect to, or that could
reasonably be expected to lead to, any Takeover Proposal.
42
SECTION 7.08. Notification of Certain Matters. The Company shall give
------------- -------------------------------
prompt notice to Parent, and Parent shall, and shall cause Merger Sub to, give
prompt notice to the Company, of the occurrence, or failure to occur, of any
event, which occurrence or failure to occur would be likely to cause any
representation or warranty contained in this Agreement to be untrue in any
material respect at any time from the date of this Agreement to the Effective
Time. Each of the Company and Parent shall give prompt notice to the other party
of any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
SECTION 7.09. Antitrust Laws. (a) Parent and the Company shall
------------- --------------
together discuss and formulate the approach to be taken with respect to
Antitrust Authorities; provided, however, that Parent shall have the right to
-------- -------
determine the overall strategy with respect to any filings, submissions of
information or documentary materials to, proceedings or negotiations with, or
any other discussions, meetings, consultations, conversations or interactions
with (collectively, "Contacts"), any Antitrust Authority. Without limiting the
--------
generality of the foregoing, but subject to the immediately succeeding sentence,
prior to any Contacts with any Antitrust Authority by Parent or any of its
Subsidiaries or by the Company or any of its Subsidiaries, Parent and the
Company shall each have the right to (i) in the case of filings, submissions of
information or documentary materials, review such Contacts prepared by the other
party and comment with respect thereto and the other party shall be required to
incorporate into such Contacts all reasonable comments of Parent or the Company,
as the case may be, and (ii) discuss prior to any Contacts the appropriate
approach to be taken with respect thereto. As part of its overall strategy,
Parent shall determine the timing of any Contacts with any Antitrust Authority
and Parent shall be entitled to act as the spokesperson in connection therewith;
provided that, to the extent permitted by such Governmental Authority, Parent
--------
shall afford the Company a reasonable opportunity to participate in any such
Contacts; provided further, that the Company shall not initiate any material
-------- ------
Contacts with any Antitrust Authority regarding any of the transactions
contemplated hereby without Parent's prior consent, it being understood that the
Company may respond to any such Contacts or requests for Contacts which are
initiated by any Antitrust Authority, or as otherwise required by applicable
Law. The parties hereto agree to provide to each other copies of all
correspondence between it (or its advisors) and any Antitrust Authority relating
to this Agreement or any of the matters described in this Section 7.09.
(b) Each party hereto shall use its best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any Antitrust Law. Without limiting the
generality of the foregoing, "best efforts" shall include, without limitation:
(i) in the case of each of Parent and the Company:
(1) promptly filing with the appropriate Antitrust Authorities
a Notification and Report Form or other applicable notification with
respect to the transactions contemplated by this Agreement;
(2) if Parent or the Company receives a formal request for
information and documents from an Antitrust Authority, substantially
complying with such
43
formal request at the earliest practicable date following the date
of its receipt thereof; and
(3) opposing vigorously any litigation relating to the Offer,
the Merger or the other transactions contemplated hereby, including,
without limitation, promptly appealing any adverse court Order.
(ii) in the case of Parent only, negotiating with respect to, and
accepting at such time as permits consummation of the Offer no later than
the Termination Date, a consent decree with an Antitrust Authority
requiring any of Parent, Merger Sub or the Company to agree or commit to
divest, hold separate or offer for sale any assets (tangible or
intangible) or any business interest of it or any of its Subsidiaries
(including, without limitation, the Surviving Corporation after
consummation of the Merger) as are necessary to permit Parent and Merger
Sub to otherwise fully consummate the Offer and the Merger (a "Consent
-------
Decree"); provided, that nothing in this Agreement shall require Parent or
------ --------
any of its Subsidiaries to comply with or accept any Consent Decree which,
if complied with, would, in Parent's reasonable judgment, be expected to
have a material adverse effect on the business, results of operations or
financial condition of Parent, the Company and their Subsidiaries, taken
as a whole, after giving effect to the Offer and the Merger.
For purposes of this Agreement, (i) "Antitrust Authorities" means
---------------------
the Federal Trade Commission, the Antitrust Division of the Department of
Justice, the attorneys general of the several states of the United States and
any other Governmental Authority having jurisdiction with respect to the
transactions contemplated hereby pursuant to applicable Antitrust Laws and (ii)
"Antitrust Law" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended,
-------------
the HSR Act, the Federal Trade Commission Act, as amended, and all other
federal, state and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
SECTION 7.10. Directors' and Officers' Insurance. (a) The Articles of
------------- ----------------------------------
Incorporation and the By-Laws of the Surviving Corporation shall contain the
provisions with respect to indemnification and exculpation from liability
substantially as set forth in the Company's Articles of Incorporation and
By-Laws on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of individuals
who on or prior to the Effective Time were directors, officers, employees or
agents of the Company, unless such modification is required by law.
(b) For a period of six years from the Effective Time, the Surviving
Corporation shall either (i) maintain in effect the Company's current directors'
and officers' liability insurance covering those Persons who are currently
covered on the date of this Agreement by the Company's directors' and officers'
liability insurance policy (a copy of which has been heretofore delivered to
Parent) (the "Indemnified Parties"); provided, however, that in no event shall
------------------- -------- -------
Parent be required to expend in any one year an amount in excess of 200% of the
annual premiums currently paid by the Company for such insurance; provided
--------
further that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation
44
shall be obligated to obtain a policy with the greatest coverage available for
a cost not exceeding such amount; provided further that the Surviving
--------
Corporation may substitute for the Company policy policies with at
least the same coverage containing terms and conditions which are no less
advantageous and provided that said substitution does not result in any gaps or
lapses in coverage with respect to matters occurring prior to the Effective Time
or (ii) if such insurance coverage is not otherwise available, cause Parent's
directors' and officers' liability insurance then in effect to cover those
Persons who are covered on the date of this Agreement by the Company's
directors' and officers' liability insurance policy with respect to those
matters covered by the Company's directors' and officers' liability policy.
(c) The Surviving Corporation shall indemnify all Indemnified Parties
to the fullest extent permitted by applicable law with respect to all acts and
omissions arising out of such individuals' services as officers, directors,
employees or agents of the Company or any of its Subsidiaries or as trustees or
fiduciaries of any plan for the benefit of employees of the Company or any of
its Subsidiaries occurring prior to the Effective Time, including, without
limitation, the transactions contemplated by this Agreement. Without limitation
of the foregoing, in the event any such Indemnified Party is or becomes involved
in any capacity in any action, proceeding or investigation in connection with
any matter, including, without limitation, the transactions contemplated by this
Agreement, occurring prior to, and including, the Effective Time, the Surviving
Corporation, from and after the Effective Time, shall pay, as incurred, such
Indemnified Party's reasonable legal and other expenses (including the cost of
any investigation and preparation) incurred in connection therewith; provided,
--------
that any Indemnified Party to whom expenses are advanced shall, prior to
receiving any such advance, if required by applicable law, provide Parent with
an undertaking to repay such advance, in full, as promptly as reasonably
practicable after it is ultimately determined that such Indemnified Party is not
entitled to indemnification hereunder. Subject to Section 7.10(d) below, the
Surviving Corporation shall pay all reasonable expenses, including attorneys'
fees, that may be incurred by any Indemnified Party in enforcing this Section
7.10 or any action which is indemnifiable hereunder.
(d) Any Indemnified Party wishing to claim indemnification under
paragraph (a) or (c) of this Section 7.10, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the Surviving
Corporation thereof. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Surviving Corporation shall have the right, from and after the Effective Time,
to assume the defense thereof (with counsel engaged by the Surviving Corporation
to be reasonably acceptable to the relevant Indemnified Party) and the Surviving
Corporation shall not be liable to such Indemnified Party for any legal expenses
of other counsel or any other expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof, (ii) such Indemnified Party will
cooperate in the defense of any such matter and (iii) the Surviving Corporation
shall not be liable for any settlement effected without its prior written
consent; provided that the Surviving Corporation shall not have any obligation
--------
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final, that
the indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law.
SECTION 7.11. Public Announcements. Parent and the Company shall
------------- --------------------
consult with each other before issuing any press release or otherwise making any
public statements with
45
respect to the transactions contemplated by this Agreement and shallnot issue
any such press release or make any such public statement prior to such
consultation and review by the other party of such release or statement, except
as may be required by law, court process or by obligations pursuant to any
listing agreement with a national securities exchange.
SECTION 7.12. Transfer Tax. The Company and Parent shall cooperate in
------------- ------------
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees and any similar taxes which become
payable in connection with the transactions contemplated by this Agreement
(together with any related interest, penalties or additions to tax, "Transfer
--------
Taxes"). All Transfer Taxes shall be paid by the Company and expressly shall not
-----
be a liability of any holder of the Company Common Stock.
SECTION 7.13. NYSE Listing. Parent shall use its best efforts to cause
------------- ------------
the Parent Common Stock to be issued in connection with the Offer and the Merger
to be listed on the NYSE, subject to official notice of issuance.
SECTION 7.14. Affiliates of the Company. Not less than 15 days prior
------------- -------------------------
to the Effective Time, the Company shall deliver to Parent a letter identifying
all Persons who, to the Company's knowledge, at the Effective Time, may be
deemed to be "affiliates" of the Company for purposes of Rule 145 under the
Securities Act or who may otherwise be deemed to be Affiliates of the Company
(the "Rule 145 Affiliate"). The Company shall use its reasonable best efforts to
------------------
cause each Person who is identified as a Rule 145 Affiliate in such list to
deliver to Parent prior to the Effective Time, a written agreement, in customary
form (a "Rule 145 Affiliate Agreement").
----------------------------
SECTION 7.15. Section 16 Matters. Prior to the Effective Time, Parent
------------- ------------------
and the Company shall take all such steps as may be required to cause the
transactions contemplated by this Agreement, including any dispositions of
Company Common Stock (including derivative securities with respect to the
Company Common Stock) and acquisitions of Parent Common Stock (including
derivative securities with respect to Parent Common Stock) by each individual
who is or will be subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to the Company or Parent, as the case may be, to be
exempt under Rule 16b-3 promulgated under the Exchange Act.
SECTION 7.16. Employee Benefits. (a) From and after the Effective
------------- -----------------
Time, Parent and the Surviving Corporation shall honor all Company Employee
Benefit Plans and compensation arrangements and agreements in accordance with
their terms as in effect immediately before the Effective Time, subject to any
amendment or termination thereof that may be permitted by such terms. For a
period of not less than one year following the Effective Time, Parent shall
provide, or cause to be provided, to current and former employees of the Company
and its Subsidiaries who are not collectively bargained employees (the "Company
-------
Employees") compensation and employees benefits that are, in the aggregate for
---------
all Company employees taken as a whole (and not on an individual basis) not less
favorable than those provided to Company Employees under the material Company
Employee Benefit Plans immediately before the Effective Time. The foregoing
shall not be construed to prevent the
46
termination of employment of any Company Employee or the amendment or
termination of any particular Company Employee Benefit Plan or compensation
arrangement to the extent permitted by its terms as in effect immediately before
the Effective Time, nor shall it be construed to require the provision or
continuation of any compensation or benefit to any Company Employee not
otherwise entitled by virtue of his employment status or terms of a relevant
Company Benefit Plan. From and after the Acceptance Date, Parent will cause the
Company to comply with this covenant.
(b) For all purposes under the employee benefit plans of Parent and
its Affiliates providing benefits to any Company Employees after the Effective
Time (the "New Plans"), each Company Employee shall be credited with his or her
---------
years of service with the Company and its Affiliates before the Effective Time,
to the same extent as such Company Employee was entitled, before the Effective
Time, to credit for such service under any similar Company Employee Benefit
Plans, provided, that the foregoing shall not apply to the extent that is
application would result in a duplication of benefits or for newly established
plans and programs for which prior service of Parent employees is not taken into
account. In addition, and without limiting the generality of the foregoing: (i)
each Company Employee shall be immediately eligible to participate, without any
waiting time, in any and all New Plans to the extent coverage under such New
Plan replaces coverage under a comparable Company employee benefit plan or
compensation arrangement or agreements in which such Company Employee
participated immediately before the transfer to the New Plan (such plans,
collectively, the "Old Plans"); and (ii) for purposes of each New Plan providing
---------
medical, dental, pharmaceutical and/or vision benefits to any Company Employee,
Parent shall cause all pre-existing condition exclusions and actively-at-work
requirements of such New Plan to be waived for each employee who, at the time of
transfer to such New Plan, is participating in an Old Plan providing such
benefit and his or her covered dependents, and Parent shall cause any eligible
expenses incurred by such employee and his or her covered dependents during the
portion of the plan year of the Old Plan ending on the date such employee's
participation in the corresponding New Plan begins to be taken into account
under such New Plan for purposes for satisfying all deductible, coinsurance and
maximum out-of-pocket requirements applicable to such employee and his or her
covered dependents for the applicable plan year as if such amounts had been paid
in accordance with such New Plan.
(c) For so long after the Effective Time as the Company maintains the
cash or deferred arrangement under Section 401(k) of the Code in which Company
Employees participate immediately prior to the Effective Time, (the "401(k)
-----
Plan"), and Parent maintains a 401(k) plan with a loan feature for similarly
----
situated employees, Parent shall cause the 401(k) Plan to retain the loan
feature of such plan.
(d) For a period of at least one year following the Effective Time,
Parent shall maintain a severance plan which provides substantially similar
benefits as the Company's Salary Continuation Plan (as in effect at the
Effective Time), but which allows the payment of severance benefits in a lump
sum at Parent's discretion, and allows the payment by Parent of COBRA premiums
for the salary continuation period in lieu of continued participation in any
active medical plan.
47
(e) In addition, Parent acknowledges that the other actions described
in Section 7.16 of the Company Disclosure Schedule have been or shall be taken.
SECTION 7.17. Voting of Shares. Parent agrees to vote all shares of
------------- ----------------
Company Common Stock beneficially owned by it or any of its Subsidiaries in
favor of adoption of this Agreement at the Company Shareholder Meeting.
SECTION 7.18. The Company Rights Plan. Prior to the Effective Time,
-----------------------
the Company shall take all necessary action to (i) amend the Rights Agreement so
as to accelerate the Final Expiration Date (as such term is used in the Rights
Agreement) to a date which is immediately prior to the Effective Time, and (ii)
ensure that after such acceleration (A) none of the Company, Parent or Merger
Sub shall have any obligations under the Company Rights or Rights Agreement and
(B) none of the holders of the Rights shall have any rights under the Rights or
Rights Agreement.
SECTION 7.19. Fees and Expenses. Whether or not the Offer or the
------------- -----------------
Merger is consummated, all expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, except expenses incurred in connection with the filing, printing
and mailing of the Offer Documents, the Schedule 14D-9 and the Proxy Statement,
which shall be shared equally by Parent and the Company.
SECTION 7.20. Merger Sub. (a) As soon as practicable after the date
------------- ----------
hereof, Parent shall form, or cause to be formed, Merger Sub and shall cause
Merger Sub to execute this Agreement.
(b) Merger Sub will be formed solely for the purpose of engaging in
the transactions contemplated by this Agreement and will have no Subsidiaries
and will undertake no business or activities other than in connection with this
Agreement and engaging in the transactions contemplated hereby.
(c) Parent will take all action necessary to cause Merger Sub to take
all actions required of it under this Agreement and to consummate the Offer and
the Merger on the terms and conditions set forth in this Agreement.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to Obligations of Each Party. The obligations of the
------------- ---------------------------------------
Company, Parent and Merger Sub to consummate the Merger are subject to the
satisfaction or, if permitted by applicable Law, waiver, of the following
conditions:
(a) to the extent required by applicable law, this Agreement shall
have been approved by the shareholders of the Company in accordance with the
VSCA;
48
(b) no provision of any applicable Law and no Order shall prohibit the
consummation of the Merger;
(c) Parent Common Stock to be issued in the Merger shall have been
authorized for listing on the NYSE, subject to official notice of issuance;
(d) if required, the Merger Registration Statement shall have become
effective in accordance with the provisions of the Securities Act, no stop order
suspending the effectiveness of the Merger Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated by the SEC and not concluded or withdrawn; and
(e) Merger Sub shall have purchased shares of Company Common Stock
pursuant to the Offer.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination. This Agreement may be terminated at any
------------- -----------
time prior to the Effective Time, whether before or after the Company
Shareholder Approval:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent:
(i) if at any time prior to the Acceptance Date, the Company has
breached in any material respect any representation, warranty,
covenant or other agreement contained in this Agreement, which (A)
would give rise to the failure of a condition set forth in clause
(iii)(f) of Annex I, (B) cannot be or has not been cured prior to the
earlier of (x) 30 days following receipt by the Company of written
notice from Parent of such breach or failure to perform and (y) the
Termination Date and (C) has not been waived by Parent pursuant to the
provisions hereof;
(ii) if at any time after the date hereof and prior to the
Acceptance Date, (A) the Company, or its Board of Directors, as the
case may be, shall have (1) entered into any agreement with respect to
any Takeover Proposal other than the Offer or the Merger and other
than a confidentiality agreement contemplated by Section 7.07, (2)
amended, conditioned, qualified, withdrawn or modified, or proposed or
resolved to do so, in a manner adverse to Parent or Merger Sub, its
approval and recommendation of the Offer, the Merger and this
Agreement, or (3) approved or recommended, or proposed to approve or
recommend, any Takeover Proposal other than the Offer or the Merger,
or (B) the Company or the Company's Board of Directors or any
committee thereof shall have resolved to do any of the foregoing; or
49
(iii) if at any time prior to the Acceptance Date the Company
breaches any of its obligations under Section 7.07 or Section 9.01(c)
hereof;
(c) by the Company:
(i) if at any time prior to the Acceptance Date, Parent has
breached or failed to perform in any material respect any
representation, warranty, covenant or other agreement contained in
this Agreement, which (A) cannot be or has not been cured prior to the
earlier of (x) 30 days following receipt by Parent of written notice
from the Company of such breach or failure to perform and (y) the
Termination Date and (B) has not been waived by the Company;
(ii) if at any time prior to the Acceptance Date a Superior
Proposal is received by the Company and the Board of Directors of the
Company reasonably determines in good faith (after receiving the
advice of outside legal counsel) that it is necessary to terminate
this Agreement and enter into an agreement to effect the Superior
Proposal to comply with its fiduciary duties under applicable law;
provided that the Company may not terminate this Agreement pursuant to
--------
this Section 9.01(c)(ii) unless and until (A) six Business Days have
elapsed following delivery to Parent of a written notice of such
determination by the Board of Directors of the Company and during such
six Business Day period the Company has fully cooperated with Parent,
including, without limitation, informing Parent of the terms and
conditions of such Superior Proposal, and the identity of the Person
making such Superior Proposal, with the intent of enabling the parties
hereto to agree to a modification of the terms and conditions of this
Agreement so that the transactions contemplated hereby may be
effected; (B) at the end of such six Business Day period the Takeover
Proposal continues in the judgment of the Board of Directors of the
Company to constitute a Superior Proposal and the Board of Directors
of the Company confirms its determination (after receiving the advice
of outside legal counsel) that it is necessary to terminate this
Agreement and enter into an agreement to effect the Superior Proposal
to comply with its fiduciary duties under applicable law; and (C) (x)
at or prior to such termination, Parent has received all amounts due
under Section 9.03 hereof by wire transfer in same day funds and (y)
immediately following such termination the Company enters into a
definitive acquisition, merger or similar agreement to effect the
Superior Proposal;
(d) by either Parent or the Company:
(i) if the Offer has not been consummated on or before February
28, 2001 (the "Termination Date"); provided that the right to
---------------- --------
terminate this Agreement pursuant to this clause shall not be
available to any party whose failure to fulfill any material
obligation of this Agreement or other material breach of this
Agreement has been the cause of, or resulted in, the failure of the
Offer to have been consummated on or prior to the aforesaid date; or
50
(ii) if any court of competent jurisdiction or any Governmental
Authority shall have issued an Order or taken any other action
permanently restricting, enjoining, restraining or otherwise
prohibiting acceptance for payment of, and payment for, shares of
Company Common Stock pursuant to the Offer or consummation of the
Merger and such Order or other action shall have become final and
nonappealable.
SECTION 9.02. Effect of Termination. In the event of termination of
------------- ---------------------
this Agreement by Parent or the Company, as provided in Section 9.01, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent or Merger Sub or their respective officers or
directors (except that Section 7.02, Section 7.19, this Section 9.02 and
Sections 9.03, 10.03, 10.04, 10.05, 10.11 and 10.13 shall survive the
termination); provided, however, that nothing contained in this Section 9.02 or
-------- -------
in Section 9.03 (except the proviso to Section 9.03(c)) shall relieve any party
hereto from any liability for any breach of this Agreement.
SECTION 9.03. Payment of Certain Fees. (a) If this Agreement is
------------- -----------------------
terminated by Parent in accordance with Section 9.01(b)(ii)(A)(1), Section
9.01(b)(ii)(A)(2), or Section 9.01(b)(ii)(A)(3), or by the Company in accordance
with Section 9.01(c)(ii), then the Company shall pay to Parent in immediately
available funds, a termination fee in an amount equal to $125 million (the
"Termination Fee").
---------------
(b) If this Agreement is terminated by Parent or the Company
pursuant to Section 9.01(b)(ii)(B), Section 9.01(b)(iii) or Section 9.01(d)(i)
hereof and a Takeover Proposal has been made and publicly announced or
communicated to the Company's shareholders after the date of this Agreement and
prior to the Termination Date, and concurrently with or within twelve months of
the date of such termination a Third Party Acquisition Event occurs, then the
Company shall within 15 Business Days of the occurrence of such Third Party
Acquisition Event pay to Parent the Termination Fee.
"Third Party Acquisition Event" shall mean earlier of (i) the
-----------------------------
consummation of a Takeover Proposal involving the purchase of a majority of
either the equity securities of the Company or of the consolidated assets of the
Company and its Subsidiaries, taken as a whole, or any such transaction that, if
it had been proposed prior to the termination of this Agreement would have
constituted a Takeover Proposal or (ii) the entering into by the Company or any
of its Subsidiaries of a definitive agreement with respect to any such
transaction.
(c) The Company and Parent agree that, if (1) this Agreement is
terminated by Parent or the Company pursuant to Section 9.01(d)(i) or
9.01(d)(ii) and (2) at the time of such termination, (I) any of the events or
circumstances under clauses (ii), (iii)(a) or (iii)(b) of Annex I occur or exist
and continue and (II) no events or circumstances under clauses (iii)(c),
(iii)(e), (iii)(f), or (iii)(h) of Annex I shall occur or exist, then Parent
shall pay to the Company a fee of $125 million (the "Reverse Termination Fee").
-----------------------
The Reverse Termination Fee shall be the exclusive remedy of the Company with
respect to such termination; provided, however, that nothing herein shall
-------- -------
relieve any party from liability for the willful breach of any of its
representations and warranties or the breach of any of its covenants or
agreements set forth in this Agreement.
51
(d) Any payment of fees pursuant to this Section 9.03 shall be made
within five Business Days after termination of this Agreement (or as otherwise
expressly set forth in this Agreement) by wire transfer of immediately available
funds. If either party fails to pay or reimburse the other party for any fees
due hereunder, such party shall pay the costs and expenses (including legal fees
and expenses) in connection with any action, including the filing of any
lawsuits or other legal action, taken to collect payment, together with interest
on the amount of any unpaid and unreimbursed fees at the publicly announced
prime rate of Citibank, N.A. from the date such payment or reimbursement was
required to be made to the date that it is made.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Representations and Warranties. The respective
-------------- ------------------------------
representations and warranties of the Company, on the one hand, and Parent, on
the other hand, contained herein or in any certificates or other documents
delivered prior to or at the Closing, shall not be deemed waived or otherwise
affected by any investigation made by any party. Each and every such
representation and warranty shall expire on, and be terminated and extinguished
at, the Effective Time and thereafter neither the Company nor Parent shall be
under any liability whatsoever with respect to any such representation or
warranty. This Section 10.01 shall have no effect upon any other obligation,
covenant or agreement of the parties hereto, which shall survive in accordance
with their terms.
SECTION 10.02. Extension; Waiver. At any time prior to the Effective
-------------- -----------------
Time, the parties hereto, by action taken by or on behalf of the respective
Boards of Directors of the Company or Parent, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
SECTION 10.03. Notices. All notices, requests, demands, waivers and
-------------- -------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, or sent by
telex, telegram or telecopier, as follows:
(a) if to the Company, to it at:
Fort Xxxxx Corporation
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
52
with a copy (which shall not constitute notice) to:
Watchell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 212-403-2000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
(b) if to Parent, to it at:
Georgia-Pacific Corporation
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
with a copy (which shall not constitute notice) to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 212-848-7179
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third Business Day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
SECTION 10.04. Entire Agreement. This Agreement and the schedules and
-------------- ----------------
other documents referred to herein or delivered pursuant hereto or
simultaneously herewith and the Confidentiality Agreement, collectively contain
the entire understanding of the parties hereto with respect to the subject
matter contained herein and supersede all prior agreements and understandings,
oral and written, with respect thereto.
SECTION 10.05. Binding Effect; Benefit; Assignment. This Agreement
-------------- -----------------------------------
shall inure to the benefit of and be binding upon the parties hereto and, with
respect to the provisions of Sections 7.10 and 7.15 hereof, shall inure to the
benefit of the Persons or entities benefiting from the provisions thereof
pursuant to Sections 7.10 and 7.15, who are intended to be third-party
beneficiaries thereof, and their respective successors and permitted assigns,
but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties, except that Merger Sub may assign and
transfer its right and obligations hereunder to any of its Affiliates. Except as
provided in the immediately preceding sentence, nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the parties
hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
53
SECTION 10.06. Amendment and Modification. Subject to applicable law,
-------------- --------------------------
this Agreement may be amended, modified and supplemented in writing by the
parties hereto in any and all respects before the Acceptance Date
(notwithstanding the Company Shareholder Approval), by action taken by the
respective Boards of Directors of Parent and the Company or by the respective
officers authorized by such Boards of Directors or otherwise, as the case may
be; provided, however, that after the Company Shareholder Approval, no amendment
-------- -------
shall be made which by law requires further approval by the shareholders of the
Company without such further approval.
SECTION 10.07. Further Actions. Each of the parties hereto agrees
-------------- ---------------
that, except as otherwise provided in this Agreement and subject to its legal
obligations, it will use its reasonable best efforts to fulfill all conditions
precedent specified herein, to the extent that such conditions are within its
control, and to do all things reasonably necessary to consummate the
transactions contemplated hereby.
SECTION 10.08. Headings. The descriptive headings of the
-------------- --------
several Articles and Sections of this Agreement are inserted for
convenience only, do not constitute a part of this Agreement and
shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 10.09. Enforcement. The parties agree that irreparable damage
-------------- -----------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 10.10. Counterparts. This Agreement may be executed in several
-------------- ------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
SECTION 10.11. Applicable Law. Except as mandatorily required under
-------------- --------------
the laws of the State of Georgia or the Commonwealth of Virginia, this Agreement
and the legal relations between the parties hereto shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflict of laws rules thereof.
SECTION 10.12. Severability. If any term, provision, covenant or
-------------- ------------
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
SECTION 10.13. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS
-------------- --------------------
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
[SIGNATURE PAGE FOLLOWS]
54
IN WITNESS WHEREOF, each of Parent, Merger Sub and the Company
has caused this Agreement to be executed by its officers thereunto duly
authorized, all as of the date first above written.
GEORGIA-PACIFIC
CORPORATION
By: /s/ A. D. Xxxxxxx
--------------------------------
Name: A.D. Xxxxxxx
Title: Chairman, CEO & President
FENRES ACQUISITION CORP.
By: /s/ A. D. Xxxxxxx
--------------------------------
Name: A.D. Xxxxxxx
Title: Chairman, CEO and President
FORT XXXXX CORPORATION
By: /s/ Miles X. Xxxxx
--------------------------------
Name: Miles X. Xxxxx
Title: Chairman & CEO
ANNEX I
Conditions of the Offer
Notwithstanding any other provision of the Offer, but subject to
compliance with Section 2.01(a) of the Agreement and Plan of Merger dated as of
July 16, 2000 among Parent, Merger Sub and the Company (the "Merger Agreement")
(each defined term used herein shall have the meaning assigned to such term in
the Merger Agreement), Merger Sub shall not be required to accept for payment or
pay for any shares of Company Common Stock tendered pursuant to the Offer, and
may extend or amend the Offer in accordance with the Merger Agreement, if (i)
the Minimum Condition shall not have been satisfied; (ii) the applicable waiting
period under the HSR Act or any material European antitrust filing shall not
have expired or been terminated; or (iii) on or after the date of the Merger
Agreement and at or prior to the Acceptance Date, any of the following events or
circumstances occurs or exists and is continuing:
(a) there shall have been instituted or pending any litigation, suit,
claim, action or proceeding before any federal or state court of the United
States of America (other than (i) any such action in which a motion for a
temporary restraining order, a preliminary injunction or a permanent injunction
shall have been denied or shall have expired, or a judicial order granting any
such temporary restraining order, preliminary injunction or permanent injunction
shall have been reversed on appeal and not reinstated, (ii) any such action or
proceeding in which the United States Department of Justice, or the Federal
Trade Commission or any applicable state authority does not file within 10
Business Days after commencement of such action a motion seeking injunctive
relief of the type referred to in clauses (1) through (3) of this paragraph (a),
or (iii) an action filed with consent of Merger Sub) by any United States
federal government or governmental authority or agency or any of the several
states of the United States or any attorney general thereof (1) challenging or
seeking to make illegal, materially delay, or otherwise, directly or indirectly,
restrain or prohibit or make materially more costly (in each case, under
Antitrust Laws), the making of the Offer, the acceptance for payment of any
shares of Company Common Stock by Parent, Merger Sub or any other Affiliate of
Parent, or the consummation of any other transaction contemplated by the Merger
Agreement; (2) seeking an order of divestiture that, if complied with, would, in
Parent's reasonable judgment, be expected to have a material adverse effect on
the business, results of operations or financial condition of Parent, the
Company and their Subsidiaries, taken as a whole, after giving effect to the
Offer and the Merger; or (3) seeking (under Antitrust Laws) to impose or confirm
any limitation on the ability of Parent, Merger Sub or any other Subsidiary of
Parent to exercise effectively full rights of ownership of any shares of Company
Common Stock on all matters properly presented to the Company's shareholders,
including, without limitation, the approval and adoption of the Merger Agreement
and the transactions contemplated by the Merger Agreement; provided, however,
that no such litigation or proceeding shall constitute a condition to Merger
Sub's obligations under the Offer to the extent that Parent or Merger Sub is in
breach of its obligations under Section 7.09 thereof;
(b) there shall have been (i) any Law enacted, promulgated, amended,
issued or deemed applicable to (1) Parent, the Company or any of their
respective Subsidiaries or (2) any transaction contemplated by the Merger
Agreement or (ii) entered, promulgated or
enforced by any court or Governmental Authority, any Order of any kind
which prohibits, restrains, restricts or enjoins the consummation of the Offer
or has effect of making the Offer illegal, in each case, by any legislative body
or Governmental Authority that would result, directly or indirectly, in any of
the consequences referred to in clauses (1) through (3) of paragraph (a) above;
provided, however, that no such Law or Order shall constitute a condition to
Merger Sub's obligations under the Offer to the extent Parent or Merger Sub is
in breach of its obligations under Section 7.09 thereof;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the NYSE (other than a shortening
of trading hours or any coordinated trading halt triggered solely as a result of
a specified increase or decrease in a market index), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any material limitation (whether or not mandatory) by any
government or Governmental Authority, on the extension of credit by banks or
other lending institutions, (iv) a commencement of a war or armed hostilities or
other national or international calamity directly or indirectly involving the
United States or (v) in the case of any of the foregoing existing on the date
hereof, a material acceleration or worsening thereof;
(d) Parent Common Stock to be issued in the Offer shall not have been
authorized for listing on the NYSE, subject to official notice of issuance;
(e) other than with respect to any Order that is the subject of
paragraph (a) or (b) above, there shall have been enacted, entered, promulgated
or enforced by any court or Governmental Authority any Order which prohibits,
restrains, restricts or enjoins the consummation of the Offer or has the effect
of making the Offer illegal;
(f) the Company shall have breached or failed to perform in any
material respect (i) its obligations under the Merger Agreement, (ii) the
representations and warranties of the Company contained in the Merger Agreement
that are qualified by reference to a Company Material Adverse Effect shall not
have been true when made or at any time prior to the consummation of the Offer
as if made at or at and as of such time (other than representations and
warranties which by their terms address matters only as of another specified
date, which shall be true and correct only as of such date), or (iii) the
representations and warranties of the Company contained in the Merger Agreement
that are not so qualified shall not have been true when made or at any time
prior to the consummation of the offer as if made at and as of such time (other
than representations and warranties which by their terms address matters only as
of another specified date, which shall be true and correct only as of such
date), except, in the case of clause (iii) only, for such inaccuracies as are
not reasonably likely to, individually or in the aggregate, result in a Company
Material Adverse Effect; and
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) a stop order suspending the effectiveness of the Offer
Registration Statement shall have been issued by the SEC or any proceedings for
that purpose shall have been initiated by the SEC and not concluded or
withdrawn;
2
which, in the reasonable judgment of Parent in any such case, and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Merger Sub and
Parent and may be asserted by Merger Sub or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Merger Sub
or Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Merger Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
3
